Cuba: U.S. Policy and Issues for the 113th Congress

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Cuba: U.S. Policy and Issues for the 113th

Congress

-name redactedSpecialist in Latin American Affairs

December 29, 2014

Congressional Research Service

7-....

www.crs.gov

R43024

Cuba: U.S. Policy and Issues for Congress

Summary

Cuba remains a one-party communist state with a poor record on human rights. The country’s

political succession in 2006 from the long-ruling Fidel Castro to his brother Raúl was

characterized by a remarkable degree of stability. In February 2013, Castro was reappointed to a

second five-year term as President (until 2018, when he would be 86 years old), and selected 52year old former Education Minister Miguel Díaz-Canel as his First Vice President, making him

the official successor in the event that Castro cannot serve out his term. Raúl Castro has

implemented a number of gradual economic policy changes over the past several years, including

an expansion of self-employment. A party congress held in April 2011 laid out numerous

economic goals that, if implemented, could significantly alter Cuba’s state-dominated economic

model. Few observers, however, expect the government to ease its tight control over the political

system. While the government reduced the number of political prisoners in 2010-2011, the

number increased in 2012; moreover, short-term detentions and harassment have increased

significantly over the past several years.

U.S. Policy

Congress has played an active role in shaping policy toward Cuba, including the enactment of

legislation strengthening and at times easing various U.S. economic sanctions. While U.S. policy

has consisted largely of isolating Cuba through economic sanctions, a second policy component

has consisted of support measures for the Cuban people, including U.S. government-sponsored

broadcasting (Radio and TV Martí) and support for human rights and democracy projects.

For most of the Obama Administration’s first six years, it continued this similar dual-track

approach. While the Administration lifted all restrictions on family travel and remittances in

2009, eased restrictions on other types of purposeful travel in 2011, and moved to reengage Cuba

on several bilateral issues, it also maintained most U.S. economic sanctions in place. On human

rights, the Administration welcomed the release of many political prisoners in 2010 and 2011, but

it also criticized Cuba’s continued harsh repression of political dissidents through thousands of

short-term detentions and targeted violence. The Administration continued to call for the release

of U.S. government subcontractor Alan Gross, imprisoned in Cuba in 2009, and maintained that

Gross’s detention remained an impediment to more constructive relations.

Just after the adjournment of the 113th Congress, however, President Obama announced on

December 17, 2014, that Cuba was releasing Alan Gross on humanitarian grounds and unveiled

major changes in U.S. policy toward Cuba, including a restoration of diplomatic relations and

new efforts toward engagement. The President maintained that the United States would continue

to raise concerns about democracy and human rights in Cuba, but that “we can do more to support

the Cuban people and promote our values through engagement.”

Legislative Activity

Strong interest in Cuba continued in the 113th Congress with attention focused on economic and

political developments, especially the human rights situation, and U.S. policy toward the island

nation, including sanctions. The continued imprisonment of Alan Gross remained a key concern

for many Members. In March 2013, Congress completed action on full-year FY2013

appropriations with the approval of H.R. 933 (P.L. 113-6); in January 2014, it completed action

on a FY2014 omnibus appropriations measure, H.R. 3547 (P.L. 113-76); and in December 2014,

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Cuba: U.S. Policy and Issues for Congress

it completed action on a FY2015 omnibus appropriations measure (H.R. 83; P.L. 113-235)—all of

these measures continued funding for Cuba democracy projects and Cuba broadcasting (Radio

and TV Martí). Both the House and Senate versions of the FY2014 Financial Services and

General Government appropriations measure, H.R. 2786 and S. 1371, had provisions that would

have tightened and eased travel restrictions respectively, but none of these provisions were

included in the FY2014 omnibus appropriations measure (P.L. 113-76). The House version of the

FY2015 Financial Services and General Government Appropriation bill, H.R. 5016 (H.Rept. 113508), had a provision that would have prohibited the use of funds to approve, license, facilitate, or

allow people-to-people travel, but the provision was not included in the FY2015 omnibus

appropriations measure (P.L. 113-235).

Several other initiatives on Cuba were introduced in the 113th Congress, but no action was taken

on these bills and resolutions. Several would have lifted or eased U.S. economic sanctions on

Cuba: H.R. 214 and H.R. 872 (overall embargo); H.R. 871 (travel); and H.R. 873 (travel and

agricultural exports). H.R. 215 would have allowed Cubans to play organized professional

baseball in the United States. H.R. 1917 would have lifted the embargo and extended

nondiscriminatory trade treatment to the products of Cuba after Cuba released Alan Gross from

prison. Identical initiatives, H.R. 778/S. 647 would have modified a 1998 trademark sanction; in

contrast, H.R. 214, H.R. 872, H.R. 873, and H.R. 1917 each had a provision that would have

repealed the sanction. H.Res. 121 would have honored the work of Cuban blogger Yoani Sánchez.

H.Res. 262 would have called for the immediate extradition or rendering of all U.S. fugitives

from justices in Cuba.

With regard to President Obama’s December 2014 announcement of a new direction for policy

toward Cuba, some Members of Congress lauded the initiative as in the best interests of the

United States and a better way to support change in Cuba, while other Members strongly

criticized the President for not obtaining concessions from Cuba to advance human rights. With

some Members vowing to oppose the Administration’s efforts toward normalization, the direction

of U.S.-Cuban relations is likely to be hotly debated in the 114th Congress.

This report reflects legislative activity through the 113th Congress and will not be updated; a new

version of the report will be issued for the 114th Congress. For additional information, see: CRS

In Focus IF10045, Cuba: President Obama’s New Policy Approach; CRS Insight IN10202, Cuba:

Release of Alan Gross and Major Changes to U.S. Policy; CRS Insight IN10204, U.S. Policy on

Cuban Migration; and CRS Report RL31139, Cuba: U.S. Restrictions on Travel and

Remittances.

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Contents

Recent Developments ...................................................................................................................... 1

Introduction...................................................................................................................................... 2

Cuba’s Political and Economic Situation......................................................................................... 4

Brief Historical Background...................................................................................................... 4

Political Conditions ................................................................................................................... 5

Human Rights Conditions ................................................................................................... 7

Economic Conditions and Reform Efforts .............................................................................. 12

Cuba’s Foreign Relations ........................................................................................................ 16

North Korean Ship Incident .............................................................................................. 21

U.S. Policy Toward Cuba............................................................................................................... 23

Background on U.S.-Cuban Relations ..................................................................................... 23

Clinton Administration’s Easing of Sanctions................................................................... 25

Bush Administration’s Tightening of Sanctions ................................................................ 25

Obama Administration Policy ................................................................................................. 26

Background on the First Six Years of U.S. Policy Under President Obama ..................... 27

President Obama Unveils a New Policy Approach Toward Cuba..................................... 30

Debate on the Direction of U.S. Policy ................................................................................... 32

Issues in U.S.-Cuban Relations...................................................................................................... 34

U.S. Restrictions on Travel and Remittances .......................................................................... 34

U.S. Agricultural Exports and Sanctions ................................................................................. 37

Trademark Sanction ................................................................................................................. 40

U.S. Funding to Support Democracy and Human Rights........................................................ 42

Oversight of U.S. Democracy Assistance to Cuba ............................................................ 46

Imprisonment and Ultimate Release of USAID Subcontractor Alan Gross...................... 47

Radio and TV Marti ................................................................................................................. 50

Funding for Cuba Broadcasting ........................................................................................ 51

Oversight of Radio and TV Martí ..................................................................................... 53

Terrorism Issues....................................................................................................................... 55

Migration Issues ...................................................................................................................... 58

Cuba Alters Its Policy Regarding Exit Permits ................................................................. 61

Anti-Drug Cooperation ............................................................................................................ 62

Cuba’s Offshore Oil Development .......................................................................................... 64

Cooperation on Oil Spill Prevention, Preparedness, and Response .................................. 65

Cuban Spies ............................................................................................................................. 67

Cuban Five—Remaining Three Released ......................................................................... 68

Legislative Initiatives in the 113th Congress .................................................................................. 69

Enacted Measures .................................................................................................................... 70

Additional Measures ................................................................................................................ 70

Figures

Figure 1. Provincial Map of Cuba ................................................................................................... 3

Figure 2. Cuba: Real GDP Growth (percentage), 2004-2013 ........................................................ 13

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Figure 3. Cuban Exports by Country of Destination, 2012 ........................................................... 17

Figure 4. Cuban Imports by Country of Origin, 2012 ................................................................... 18

Figure 5. U.S. Exports to Cuba, 2001-2013................................................................................... 38

Figure 6. Maritime Interdictions of Cubans by the U.S. Coast Guard, FY2002-FY2014 ............. 59

Appendixes

Appendix A. Selected Executive Branch Reports and Web Pages ................................................ 74

Appendix B. Earlier Developments in 2014 and 2013 .................................................................. 76

Contacts

Author Contact Information........................................................................................................... 81

Acknowledgments ......................................................................................................................... 81

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Recent Developments

On December 17, 2014, after the end of the 113th Congress, President Obama announced major

developments in U.S.-Cuban relations. First, the Cuban government released Alan Gross, the U.S.

Agency for International Development subcontractor imprisoned in Cuba for five years, on

humanitarian grounds. Second, in a separate action, the Cuban government released an important

U.S. intelligence asset imprisoned for almost two decades in exchange for three Cuban

intelligence agents who had been imprisoned in the United States since 1998. Finally, with the

release of Gross and the U.S. intelligence asset, President Obama announced a major shift in U.S.

policy toward Cuba, moving away from a sanctions-based policy aimed at isolating Cuba to a

policy of engagement. The President outlined three major steps to move toward normalization:

(1) reestablishment of diplomatic relations with Cuba (relations were severed in 1961); (2) a

review of Cuba’s designation by the Department of State as a state sponsor of international

terrorism (Cuba has been on the list since 1982); and (3) an increase in travel, commerce, and the

flow of information to and from Cuba. The President maintained that the United States would

continue to speak out on human rights and democracy issues, but stressed that more could be

done to support the Cuban people through engagement. (See “President Obama Unveils a New

Policy Approach Toward Cuba” below.)

On December 16, 2014, President Obama signed into law the Consolidated and Further

Continuing Appropriations Act, 2015 (P.L. 113-235), which provided FY2015 funding for Cuba

democracy projects and Cuba broadcasting. With regard to democracy funding, the law measure

stated that Economic Support Funds should be made available for programs in Cuba, but did not

specify an amount (the Administration had requested $20 million). The explanatory statement to

the measure provides for $27.130 million to be provided for Cuba broadcasting (the

Administration had requested $23.130 million), but also indicated that funds may be transferred

to the Office of Cuba Broadcasting (OCB) of the Broadcasting Board of Governors from

appropriated Economic Support Funds to restore OCB program reductions. (See “U.S. Funding to

Support Democracy and Human Rights” and “Radio and TV Marti” below).

On December 9, 2014, Cuba released from prison Ladies in White member Sonia Garro Alfonso,

her husband Ramón Alejandro Muñoz González, and a neighbor, Eugenio Hernández, who had

been held since March 2012. Upon release, the three reportedly were placed under house arrest

while awaiting trial. Amnesty International expressed concern that the three will not receive a fair

trial in accordance with international standards. (See “Human Rights Conditions” below.)

On December 3, 2014, the independent Havana-based Cuban Commission on Human Rights and

National Reconciliation reported that there were 8,410 short-term detentions for political reasons

in the first 11 months of 2014, far higher than the same period over the past several years. In June

2014, the group also reported that there were 102 political prisoners in the country, not including

12 released on parole who are not allowed to leave the country. (See “Human Rights Conditions”

below.)

For developments earlier in 2014 and 2013, see Appendix B.

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Introduction

Political and economic developments in Cuba and U.S. policy toward the island nation, located

just 90 miles from the United States, have been significant congressional concerns for many

years. Since the end of the Cold War, Congress has played an active role in shaping U.S. policy

toward Cuba, first with the enactment of the Cuban Democracy Act of 1992 (P.L. 102-484, Title

XVII) and then with the Cuban Liberty and Democratic Solidarity Act of 1996 (P.L. 104-114).

Both of these measures strengthened U.S. economic sanctions on Cuba that had first been

imposed in the early 1960s, but the measures also provided roadmaps for a normalization of

relations dependent upon significant political and economic changes in Cuba. A decade ago,

Congress partially modified its sanctions-based policy toward Cuba when it enacted the Trade

Sanctions Reform and Export Enhancement Act of 2000 (P.L. 106-387, Title IX) allowing for

U.S. agricultural exports to Cuba that led to the United States becoming a major source for

Cuba’s food imports.

Over the past decade, much of the debate over U.S. policy in Congress has focused on U.S.

sanctions, especially over U.S. restrictions on travel to Cuba. The George W. Bush Administration

initially liberalized U.S. family travel to Cuba in 2003, but subsequently tightened restrictions on

family and other categories of travel in 2004 because of Cuba’s crackdown on political dissidents.

In 2009, Congress took legislative action in an appropriations measure (P.L. 111-8) to ease

restrictions on family travel and travel for the marketing of agricultural exports, marking the first

congressional action easing Cuba sanctions in almost a decade. The Obama Administration took

further action in April 2009 by lifting all restrictions on family travel and on cash remittances by

family members to their relatives in Cuba and restarting semi-annual migration talks that had

been curtailed in 2004. In January 2011, the Administration announced the further easing of

restrictions on educational and religious travel to Cuba and on non-family remittances, and it also

expanded eligible airports in the United States authorized to serve licensed charter flights to and

from Cuba. In December 2014, just after the adjournment of the 113th Congress, President Obama

announced a major shift in U.S. policy toward Cuba, moving away from a sanctions-based policy

aimed at isolating Cuba to a policy of engagement and a normalization of relations. As

announced, part of the President’s initiative is to increase travel, commerce, and the flow of

information to Cuba.

This report is divided into three major sections analyzing Cuba’s political and economic situation,

U.S. policy toward Cuba, and selected issues in U.S.-Cuban relations. The first section includes a

brief historical political background on Cuba; a discussion on the current political situation under

Raúl Castro, including human rights conditions; an examination of economic conditions and

policy changes that have occurred to date under Raúl Castro; and Cuba’s foreign relations. The

second section on U.S. policy provides a broad overview of U.S. policy historically through the

George W. Bush Administration and then a discussion of current policy under the Obama

Administration. It then provides a brief discussion on the general policy debate regarding the

direction of U.S. policy toward Cuba. The third section analyzes many of the key issues in U.S.Cuban relations that have been at the forefront of the U.S. policy debate on Cuba and have often

been the subject of legislative initiatives. While legislative initiatives are noted throughout the

report where appropriate, a final section of the report provides a listing of enacted measures and

bills and resolutions introduced in the 113th Congress. An appendix also provides links to selected

executive branch reports and web pages on Cuba.

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Figure 1. Provincial Map of Cuba

Source: CRS.

Notes: This map shows 15 provinces and the special municipality of Isla de la Juventud. See a current interactive provincial map of Cuba, showing municipalities and other

information, from Juventud Rebelde (Cuba), available at http://www.juventudrebelde.cu/multimedia/graficos/nueva-division-politico-administrativa/.

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Cuba: U.S. Policy and Issues for Congress

Cuba’s Political and Economic Situation

Brief Historical Background1

Cuba did not become an independent nation until 1902. From its discovery by Columbus in 1492

until the Spanish-American War in 1898, Cuba was a Spanish colony. In the 19th century, the

country became a major sugar producer with slaves from Africa arriving in increasing numbers to

work the sugar plantations. The drive for independence from Spain grew stronger in the second

half of the 19th century, but it only came about after the United States entered the conflict when

the USS Maine sank in Havana Harbor after an explosion of undetermined origin. In the

aftermath of the Spanish-American War, the United States ruled Cuba for four years until Cuba

was granted its independence in 1902. Nevertheless, the United States still retained the right to

intervene in Cuba to preserve Cuban independence and maintain stability in accordance with the

Platt Amendment2 that became part of the Cuban Constitution of 1901. The United States

subsequently intervened militarily three times between 1906 and 1921 to restore order, but in

1934, the Platt Amendment was repealed.

Cuba’s political system as an independent nation was often dominated by authoritarian figures.

Gerardo Machado (1925-1933), who served two terms as President, became increasingly

dictatorial until he was ousted by the military. A short-lived reformist government gave way to a

series of governments that were dominated behind the scenes by military leader Fulgencio Batista

until he was elected President in 1940. Batista was voted out of office in 1944 and was followed

by two successive Presidents in a democratic era that ultimately became characterized by

corruption and increasing political violence. Batista seized power in a bloodless coup in 1952 and

his rule progressed into a brutal dictatorship. This fueled popular unrest and set the stage for Fidel

Castro’s rise to power.

Castro led an unsuccessful attack on military barracks in Santiago, Cuba, on July 26, 1953. He

was jailed, but subsequently freed and went into exile in Mexico where he formed the 26th of July

Movement. Castro returned to Cuba in 1956 with the goal of overthrowing the Batista

dictatorship. His revolutionary movement was based in the Sierra Maestra and joined with other

resistance groups seeking Batista’s ouster. Batista ultimately fled the country on January 1, 1959,

leading to more than 45 years of rule under Fidel Castro until he stepped down from power

provisionally in July 2006 because of poor health.

While Castro had promised a return to democratic constitutional rule when he first took power, he

instead moved to consolidate his rule, repress dissent, and imprison or execute thousands of

opponents. Under the new revolutionary government, Castro’s supporters gradually displaced

Portions of this background are drawn from U.S. Department of State, “Background Note: Cuba,” April 28, 2011. For

further background, see Cuba, A Country Study, ed. Rex A. Hudson, Federal Research Division, Library of Congress,

(Washington, DC: U.S. Government Printing Office, 2002); “Country Profile: Cuba,” Federal Research Division,

Library of Congress, September 2006, available at http://lcweb2.loc.gov/frd/cs/profiles/Cuba.pdf; Cuba, A Short

History, ed. Leslie Bethell (Cambridge University Press, 1993); and Hugh Thomas, Cuba: The Pursuit of Freedom,

(New York, Harper & Row, Publishers, 1971).

U.S. Senator Orville Platt introduced an amendment to an army appropriation bill that was approved by both houses

and enacted into law in 1901.

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members of less radical groups. Castro moved toward close relations with the Soviet Union while

relations with the United States deteriorated rapidly as the Cuban government expropriated U.S.

properties (see “Background on U.S.-Cuban Relations” below). In April 1961, Castro declared

that the Cuban revolution was socialist, and in December 1961, he proclaimed himself to be a

Marxist-Leninist. Over the next 30 years, Cuba was a close ally of the Soviet Union and

depended on it for significant assistance until the dissolution of the Soviet Union in 1991.

From 1959 until 1976, Castro ruled by decree. In 1976, however, the Cuban government enacted

a new Constitution setting forth the Cuban Communist Party (PCC) as the leading force in state

and society, with power centered in a Political Bureau headed by Fidel Castro. Cuba’s

Constitution also outlined national, provincial, and local governmental structures. Since then,

legislative authority has been vested in a National Assembly of People’s Power that meets twice

annually for brief periods. When the Assembly is not in session, a Council of State, elected by the

Assembly, acts on its behalf. According to Cuba’s Constitution, the president of the Council of

State is the country’s head of state and government. Executive power in Cuba is vested in a

Council of Ministers, also headed by the country’s head of state and government, that is, the

president of the Council of State.

Fidel Castro served as head of state and government through his position as president of the

Council of State from 1976 until February 2008. While he had provisionally stepped down from

power in July 2006 because of poor health, Fidel still officially retained his position as head of

state and government. National Assembly elections were held on January 20, 2008, and Fidel

Castro was once again among the candidates elected to the now 614-member legislative body.

(As in the past, voters were only offered a single slate of candidates.) On February 24, 2008, the

new Assembly was scheduled to select from among its ranks the members of the Council of State

and its president. Many observers had speculated that because of his poor health, Fidel would

choose not to be reelected as president of the Council of State, which would confirm his official

departure from heading the Cuban government. Statements from Castro himself in December

2007 hinted at his potential retirement. That proved true on February 19, 2008, when Fidel

announced that he would not accept the position as president of the Council of State, essentially

confirming his departure as titular head of the Cuban government.

Political Conditions

After Fidel stepped down from power, Cuba’s political succession from Fidel to Raúl Castro was

characterized by considerable stability. After two and one half years of provisionally serving as

President, Raúl Castro officially became Cuba’s President on February 24, 2008, when Cuba’s

legislature selected him as president of the 31-member Council of State.3

While it was not a surprise to observers for Raúl to succeed his brother Fidel officially as head of

government, the selection of José Ramón Machado Ventura as the Council of State’s first Vice

President in February 2008 was a surprise. Born in 1930, Machado was part of the older

generation of so-called históricos of the 1959 Cuban revolution along with the Castro brothers

(Fidel Castro was born in August 1926, while Raúl Castro was born in June 1931). Described as a

For more on Cuba’s political succession, see CRS Report RS22742, Cuba’s Political Succession: From Fidel to Raúl

Castro. For background discussion of potential Cuban political scenarios envisioned in the aftermath of Fidel Castro’s

stepping down from power in 2006, see CRS Report RL33622, Cuba’s Future Political Scenarios and U.S. Policy

Approaches.

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hard-line communist party ideologue, Machado reportedly was a close friend and confident of

Raúl for many years.4 The position of first vice president of the Council of State is significant

because, according to the Cuban Constitution, the person holding the office is the official

successor to the president.

While Raúl Castro began implementing some economic reforms in 2008, there has been no

change to his government’s tight control over the political system and few observers expect there

to be, with the government backed up by a strong security apparatus. Under Raúl, who served as

defense minister from the beginning of the Cuban revolution until 2008, the Cuban military has

played an increasing role in government with several key military officers and confidants of Raúl

serving as ministers.

The Cuban Communist Party (PCC) held its sixth congress in April 2011. While the party

concentrated on making changes to Cuba’s economic model, some political changes also

occurred. As expected, Fidel was officially replaced by Raúl as first secretary of the PCC, and

First Vice President José Ramón Machado became the party’s second secretary. The party’s

Political Bureau or Politburo was reduced from 23 to 15 members, with 3 new members, Marino

Murrillo, Minister of Economy Adel Yzquierdo Rodriguez, and the first secretary of the party in

Havana, Mercedes Lopez Acea. The party’s Central Committee also was reduced from 125 to 115

members, with about 80 of those being new members of the committee.

At the April 2011 party congress, Raúl Castro proposed two five-year term limits for top positions

in the party and in the government, calling for systematic rejuvenation, a change that was

confirmed by a January 2012 national PCC conference. Cuba’s revolutionary leadership has been

criticized by many observers for remaining in party and government positions far too long, and

for not passing leadership opportunities to a younger generation. Some observers had expected

leadership changes and more significant reforms at the January 2012 PCC conference. While this

did not occur, the PCC approved a resolution by which its Central Committee would be allowed

to replace up to 20% of its 115 members within its five-year mandate.5

On February 3, 2013, Cuba held elections for over 600 members of the National Assembly of

People’s Power, the national legislature, as well as over 1,600 provincial government

representatives, both for five-year terms. Under Cuba’s one-party system, the overwhelming

majority of those elected are PCC members. Critics maintain that elections in Cuba are a sham

and entirely controlled by the PCC.

The new National Assembly met on February 24, 2013, to select the next president of the Council

of State, Cuba’s head of government. As expected, Raúl Castro was selected for a second five

year-term as president (until February 2018, when Raúl will be 86 years old), but Castro also

indicated that this would be his last term in conformity with the new two-term limit for top

officials. Most significantly, First Vice President José Ramón Machado, 82 years old, was

replaced by 52-year old Miguel Díaz-Canel Bermúdez, who was serving as one of the Council of

State’s vice presidents. Díaz-Canel’s appointment as the official constitutional successor to

President Castro represents a move toward bringing about generational change in Cuba’s political

Daniel Dombey, Richard Lapper, and Andrew Ward, “A Family Business, Cuban-Americans Look Beyond the

Havana Handover,” Financial Times, February 27, 2008.

Juan O. Tamayo, “Cuban Communists OK Term Limits for Party and Government Officials,” Miami Herald, January

29, 2012, and “Cuba’s Communists Meet to Update Party, Not Much Buzz on Street,” Miami Herald, January 28,

2012; Patricia Grogg, “Cuba: Party Aims for Efficient, Inclusive Socialism,” Inter Press Service, February 1, 2012.

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system. Díaz-Canel became a member of the Politburo in 2003 and also held top PCC positions in

the provinces of Villa Clara and Holguín. He became education minister in 2009 until he was

tapped to be a vice president of the Council of State. Díaz-Canel has been described in media

reports as an experienced manager with good relations with the military and as someone that

worked his way up through the party.6

In another significant move in February 2013, the National Assembly appointed Esteban Lazo

Hernández as the new president of Cuba’s National Assembly. Lazo, who is the Cuban

government’s highest ranking official of Afro-Cuban descent, replaced long-time National

Assembly President Ricardo Alarcón, who was not a candidate in this year’s National Assembly

elections. Lazo has held top party positions in several provinces and has served as a vice

president of the Council of State.

While generational change already appears to be underway in Cuba’s political system, this does

not signify an easing of Cuba’s tightly controlled regime. In speaking on the 60th anniversary of

the start of the Cuban revolution on July 26, 2013, President Castro asserted that a generational

transfer of power had already begun, stating that “there is a slow and orderly transfer of the

leadership of the revolution to the new generations.”7 Some observers maintain that while the

leadership transition in 2018 (or earlier, given that Raúl Castro’s is 82 years old) will likely be

smooth, there is a greater likelihood for a growth in factionalism within the system without Castro

at the helm.8

On September 15, 2013, Cuba’s Conference of Catholic Bishops issued a pastoral letter

maintaining that, just as economic changes were occurring, Cuba’s political order also needed to

be updated. The bishops maintained that there should be the right of diversity with respect to

thought, creativity, and the search for truth, and maintained that out this diversity arises the need

for dialogue among diverse social groups.9 In his March 2012 pastoral visit to Cuba, Pope

Benedict VI had urged Cubans “to build a renewed and open society.”10

Human Rights Conditions

The Cuban government has a poor record on human rights, with the government sharply

restricting freedoms of expression, association, assembly, movement, and other basic rights since

the early years of the Cuban revolution. The government has continued to harass members of the

Ladies in White (Damas de Blanco) human rights group that was formed in 2003 by the female

relatives of the so-called “group of 75” dissidents arrested that year in a massive crackdown (for

more, see text box below). Two Cuban political prisoners conducting hunger strikes have died in

recent years, Orlando Zapata Tamayo in February 2010 and Wilman Villar Mendoza in January

2012. Tamayo died after an 85-day hunger strike that he had initiated to protest inhumane

“Castro Dynasty Capped at 59 Years,” Latin American Weekly Report, February 28, 2013; Damien Cave and Victoria

Burnett, “As Castro Era Drifts to Close, A New Face Steps in at No. 2,” New York Times, February 28, 2013; Marc

Frank, “Castro Successor Lacks Charisma But Is Experienced Manager,” Reuters, February 26, 2013.

Marc Frank, “Cuba’s Raúl Castro Promises Succession Has Started,” Reuters, July 26, 2013.

For example, see “Cuba Country Report,” Economist Intelligence Unit (EIU), September 2013, p. 3.

Conferencia de Obispos Católicos de Cuba, “Carta Pastoral de los Obispos Católicos de Cuba, La Esperanza No

Defrauda,” (issued September 15, 2013), available at http://www.iglesiacubana.org/index.php?option=

com_phocadownload&view=file&id=56&Itemid=108.

See “March 2012 Visit of Pope Benedict” in CRS Report R41617, Cuba: Issues for the 112th Congress.

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conditions in Cuba’s prisons. Villar Mendoza died following a 50-day hunger strike after he was

convicted of “contempt” of authority and sentenced to four years in prison.

Amnesty International (AI) published a report in March 2012 maintaining that “the Cuban

government wages a permanent campaign of harassment and short-term detentions of political

opponents to stop them from demanding respect for civil and political rights.” The report

maintained that the release of dozens of political prisoners in 2011 “did not herald a change in

human rights policy.” AI asserted that “the vast majority of those released were forced into exile,

while in Cuba the authorities were determined to contain the dissidence and government critics

with new tactics,” including intimidation, harassment, surveillance, and “acts of repudiation,” or

demonstrations by government supporters targeting government critics.11

AI has called attention to several prisoners of conscience12 in Cuba. These currently include Iván

Fernández Depestre, convicted of “dangerousness” (a pre-emptive measure defined as the special

proclivity of a person to commit crimes) in early August 2013 after participating in a peaceful

protest and sentenced to three years in prison; and brothers Alexeis, Django, and Vianco Vargas

Martín, members of the Patriotic Union of Cuba (UNPACU), who were detained in late 2012 in

Santiago and convicted in June 2014 after a summary trial in which they were charged with

“public disorder of a continuous nature.” AI believed their arrest and detention was in response to

their peaceful exercise of freedom of expression and intended to intimidate other government

critics; there three were supposed to be sentenced on July 1, 2014, but the sentencing was

postponed.13 AI also reported on other cases of arbitrary detention by the Cuban government,

including the continued detention since March 2012 of Ladies in White member Sonia Garro

Alfonso, her husband Ramón Alejandro Muñoz González, and a neighbor, Eugenio Hernández;

all three were released from prison on December 9, 2014, and placed under house arrest while

awaiting trial. AI expressed concern that the three will not receive a fair trial in accordance with

international standards.14

Beyond AI’s more narrow definition of prisoners of conscience, the Cuban government holds a

larger number of political prisoners, generally defined as a person imprisoned for his or her

political activities. While the Cuban government released numerous political prisoners in recent

years, including more than 125 released in 2010-2011 with the help of Cuba’s Catholic Church

(down from more than 200 estimated at the beginning of 2010) the number of political prisoners

has reportedly increased since 2012, according to the Havana-based Cuban Commission on

Human Rights and National Reconciliation (CCDHRN). In June 2014, the group estimated that

Cuba held at least 102 political prisoners, not including a dozen individuals arrested in Cuba’s

2003 crackdown that were released on parole, but are prevented from leaving the country. This is

up from an estimated 50 political prisoners in April 2012.15 In December 2014, Cuba reportedly

Amnesty International, Routine Repression, Political Short-Term Detentions and Harassment in Cuba, March 2012.

AI defines prisoners of conscience as those jailed because of their political, religious or other conscientiously-held

beliefs, ethnic origin, sex, color, language, national or social origin, economic status, birth, sexual orientation or other

status, provided they have neither used nor advocated violence.

AI, “Sentencing of Three Brothers Postponed,” Urgent Action, July 15, 2014.

AI, “Urgent Action: Fair Trial Must Go Ahead Without Further Delay,” November 6, 2014, and “Cuba, Further

Information: Government Critics Under House Arrest,” December 15, 2014.

Comisión Cubana de Derechos Humanos y Reconciliación Nacional (CCDHRN), “Lista Parcial de Sancionados o

Procesados por Motivos Políticos en Cuba,” 23 de junio de 2014.

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Cuba: U.S. Policy and Issues for Congress

agreed to release, as requested by the United States, 53 political prisoners as part of the overall

deal to restore bilateral relations, but the names of the 53 prisoners have not been released.16

Short-term detentions for political reasons have increased significantly over the past several

years, a reflection of the government’s change of tactics in repressing dissent. The CCDHRN

reports that there were at least 2,074 such detentions in 2010, 4,123 in 2011, 6,602 in 2012, and

6,424 in 2013. The number spiked in March 2012 surrounding the visit of Pope Benedict XVI to

Cuba. It also spiked in December 2013 when there were at least 1,123 short-term detentions for

political reasons. From January through November 2014, the number of short-term detentions for

political reasons amounted to at least 8,410 detentions, far higher than the same period over the

past several years.17

Ladies in White

A human rights group known as the Ladies in White (Las Damas de Blanco) was formed in April 2003 by the wives,

mothers, daughters, sisters, and aunts of the members of the “group of 75” dissidents arrested a month earlier in

Cuba’s human rights crackdown. The group conducts peaceful protests calling for the unconditional release of

political prisoners. Dressed in white, its members attend Mass each Sunday at St. Rita’s Church in Havana and then

walk along Fifth Avenue to a nearby park. The group has faced considerable government-orchestrated harassment and

repression over the years, particularly when members have staged protest in other parts of Havana or other parts of

the country. Both Amnesty International and the Department of State at various junctures have called for the end of

harassment and attacks against the human rights group. A founding member and leader of the Ladies in White, Laura

Pollán, died unexpectedly in a Havana hospital from respiratory complications on October 14, 2011.

Amnesty International issued an urgent action appeal in July 2012, calling on Cuban authorities to either charge three

protestors—Ladies in White Niurka Luque Álvarez and Sonia Garro Alfonso, and Sonia’s husband Ramón Alejandro

Muñoz González—or release them. All three were first detained in March 2012 after the two women participated in

a peaceful commemoration of the anniversary of Cuba’s March 2003 human rights crackdown. Luque Álvarez

ultimately was released in October 5, 2012, while both Garro Alfonso and her husband, along with a neighbor,

Eugenio Hernández, were incarcerated until December 9, 2014, when they were placed under house arrest while

awaiting trial.

With Cuba’s new travel policy, current Ladies in White leader Berta Soler traveled abroad to Europe and the United

States for almost three months beginning in March 2013. Soler traveled to several European countries, including

Belgium to accept the European Parliament’s Sakharov prize that the human rights group was awarded in 2005, and

also visited Washington, DC, and Miami. After her return to Cuba, Soler said that she would like to broaden the

movement and establish delegations around the island to increase the group’s membership. The group reportedly has

a membership of around 300 nationwide.

Website: http://www.damasdeblanco.org.

Internationally known Cuban democracy and human rights activist Oswaldo Payá was killed in a

car accident in July 2012 in the eastern province of Granma along with another Cuban human

rights activist Harold Cepero. Payá, whose death prompted expressions of sympathy from around

the world, is probably best known for his work founding the Varela Project in 1996.18 Two

Europeans accompanying Payá were also in the crash: Jens Aron Modig, president of the Swedish

Christian Democrats youth wing, who was a passenger; and Angel Carromero Barrios, a leader of

the Spanish Popular Party’s youth organization, who was driving. Carromero was convicted in

October 2012 of vehicular manslaughter for speeding and sentenced to four years in prison; after

Daniel Trotta, “In U.S.-Cuba Prisoner Swap, Mystery Surrounds the Unnamed 53,” Reuters News, December 28,

2014.

CCDHRN, “Cuba: Algunos Actos de Represión Política en el Mes de Noviembre de 2014” 3 de diciembre de 2014.

The project collected thousands of signatures supporting a national plebiscite for political reform in accordance with

a provision of the Cuban Constitution.

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diplomatic efforts by Spain, he was released in late December 2012 to serve the rest of his term in

Spain. In early March 2013, however, Carromero maintained in an interview with the Washington

Post that the car he was driving was struck from behind just before the accident and that he was

heavily drugged when he admitted to driving recklessly.19 Payá’s daughter has called for the

United Nations to conduct an independent investigation into the crash. Modig maintains that he

was asleep at the time of the accident and does not remember any details.20 In July 2012, the U.S.

Senate approved S.Res. 525 (Nelson), calling for an impartial third-party investigation of the

crash. The U.S. Department of State issued a statement on March 28, 2013, calling for an

independent international investigation into the circumstances leading to the death of Payá and

Cepero.21

Over the past several years, numerous independent Cuban blogs have been established that are

often critical of the Cuban government. The Cuban government has responded with its own team

of official bloggers to counter and disparage the independent bloggers.22 Cuban blogger Yoani

Sánchez has received considerable international attention since late 2007 for her website,

Generación Y, which includes commentary critical of the Cuban government. (Sánchez’s website

is available at http://generacionyen.wordpress.com/, and has links to numerous other independent

blogs and websites.) In May 2014, Sánchez launched an independent digital newspaper in Cuba,

available on the Internet (http://www.14ymedio.com/), distributed through a variety of methods in

Cuba, including CDs, USB flash drives, and DVDs. In the 113th Congress, H.Res. 121 (Hastings,

FL), introduced in March 2013, would honor Sánchez “for her ongoing efforts to challenge

political, economic, and social repression by the Castro regime.”

While the human rights situation in Cuba remains poor, the country has made some advances in

recent years. In 2008, Cuba lifted a ban on Cubans staying in hotels that previously had been

restricted to foreign tourists in a policy that had been pejoratively referred to as “tourist

apartheid.” In recent years, as the government has enacted limited economic reforms, it has been

much more open to debate on economic issues. The Catholic Church, which played a prominent

role in the release of political prisoners in 2010, has been active in broadening the debate on

social and economic issues through its publications Palabra Nueva (New World) and Espacio

Laical (Space for Laity).23 In June 2014, the two editors of Espacio Laical, Roberto Veiga and

Lenier Gonzalez, resigned from their positions, maintaining that they had been pressured from

inside the Church from those who did not want the Church to be involved in politics, but on July

1, 2014, they announced that they would launch a new online forum in the future known as Cuba

Posible.24

In January 2013, Cuba took the significant step of eliminating its long-standing policy of

requiring an exit permit and letter of invitation for Cubans to travel abroad (see “Cuba Alters Its

Peter Finn, “Account of Cuban Crash Adds to Mystery,” Washington Post, March 6, 2013; “I Only Wish They Were

Nightmares, and Not Memories,” (Editorial, Opinion) Washington Post, March 6, 2013.

“Cuba, Aron Medig Reitera en una Reunión con la Hija de Oswaldo Payá que No Recuerda Nada del Accidente,”

European Press, March 13, 2013.

U.S. Department of State, Daily Press Briefing, March 28, 2013.

Committee to Protect Journalists, “After the Black Spring, Cuba’s New Repression,” July 6, 2011.

See http://www.palabranueva.net/newPage/index.php and http://www.espaciolaical.org/.

Marc Frank, “Cuba’s Catholic Church May Restrict Rare Forum for Open Debate,” Reuters, June 16, 2014; Daniel

Trotta and Rosa Tania Valdés, “Cuban Editors, Pressured to Leave Magazine, Announce New Venture,” Reuters, July

1, 2014.

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Policy Regarding Exit Permits” below). The change has allowed prominent dissidents and human

rights activists to travel abroad and return to Cuba. However, those Cubans subject to ongoing

legal proceedings, including political prisoners who have been released on parole, have been

restricted from traveling abroad.25

Prominent dissident economist Oscar Espinosa Chepe died in Spain on September 23, 2013, after

battling chronic liver disease and cancer. Espinosa had been imprisoned in March 2003 as one of

the “group of 75” dissidents, but was released on medical parole in November 2004. The

Department of State issued a statement after Espinosa Chepe’s death maintaining that “he was a

tireless champion for improving economic policy and human rights in Cuba” and that “he

remained optimistic that the country he loved would experience economic prosperity and

democratic governance.”26 Espinosa Chepe traveled to Madrid in March 2013 for medical

treatment. He is survived by Miriam Leiva, a longtime human rights activist and independent

journalist who helped found the Ladies in White.

In June 2014, the State Department released its 2014 Trafficking in Persons Report. As it has

since 2003, Cuba remained on the Tier 3 list of countries whose governments do not comply with

the minimum standards for combatting trafficking against Cuba. The report noted, however, that

for the first time Cuba released and reported concrete action against sex trafficking, and that the

Cuban government maintained that it would be amending its criminal code to ensure conformity

with the 2000 United Nations Trafficking in Persons Protocol.

Human Rights Reporting on Cuba

Amnesty International (AI), Human Rights in the Republic of Cuba, http://www.amnesty.org/en/region/cuba.

AI Annual Report 2013, section on Cuba, http://www.amnesty.org/en/region/cuba/report-2013;

AI, “Routine Repression, Political Short-Term Detentions and Harassment in Cuba,” March 2012, available at

http://www.amnesty.org/en/library/asset/AMR25/007/2012/en/647943e7-b4eb-4d39-a5e3-ea061edb651c/

amr250072012en.pdf.

Cuban Commission on Human Rights and National Reconciliation (Comisión Cubana de Derechos

Humanos y Reconciliación Nacional, CCDHRN), the independent Havana-based human rights organization

produces a monthly report on short-term detentions for political reasons.

CCDHRN, “Cuba: Algunos Actos de Represion Politica en el Mes de Noviembre de 2014,” December 3, 2014,

available at https://www.fidh.org/es/americas/actividades-de-organismos-miembros-america-latina/16589-ccdhrncuba-actos-de-represion-politica-en-noviembre-2014;

CCDHRN, “Lisa Parcial de Condenados o Procesados por Motivos Politicos en Cuba,” June 23, 2014, available at

http://www.unpacu.org/wp-content/uploads/PRESOS-POLITICOS-JUNIO-2014.pdf;

Human Rights Watch (HRW), http://www.hrw.org/en/americas/cuba.

HRW’s 2014 World Report maintains that “the Cuban government continues to repress individuals and groups

who criticize the government or call for basic human rights,” available at http://www.hrw.org/world-report/2014/

country-chapters/cuba.

Inter-American Commission on Human Rights, Annual Report 2013, April 23, 2014, Chapter IV has a

section on Cuba, available at: http://www.oas.org/en/iachr/docs/annual/2013/docs-en/AnnualReport-Chap4-

Fabiola Santiago, “Despite ‘Reforms” Some Cubans Aren’t Free to Travel,” Miami Herald, March 12, 2013; U.S.

Department of State, “Cuban Compliance with the Migration Accords, (October 2013 to April 2014),” Report to

Congress, May 7, 2014.

U.S. Department of State, “Death of Cuban Economist and Activist Oscar Espinosa Chepe,” Press Statement,

September 23, 2013.

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Cuba.pdf.

U.S. Department of State, Country Report on Human Rights Practices for 2013, February 27, 2014, available at

http://www.state.gov/documents/organization/220646.pdf. According to the report, Cuba’s “principal human rights

abuses were abridgement of the rights of citizens to change the government and the use of government threats,

extrajudicial psychical violence, intimidation, mobs, harassment, and detentions to prevent free expression and

peaceful assembly.”

Economic Conditions and Reform Efforts

Cuba’s economy is largely state-controlled, with the government owning most means of

production and employing almost 80% of the workforce. Key sectors of the economy that

generate foreign exchange include the export of professional services (largely medical personnel

to Venezuela); tourism, which has grown significantly since the mid-1990s, with 2.8 million

tourists visiting Cuba in 2013 (below a goal of 3 million tourists); nickel mining, with the

Canadian mining company Sherritt International involved in a joint investment project; and a

biotechnology and pharmaceutical sector that supplies the domestic healthcare system and has

fostered a significant export industry. Remittances from relatives living abroad, especially from

the United States, have also become an important source of hard currency, and are estimated to be

between $1.4 billion and $2 billion annually. The once-dominant sugar industry has declined

significantly over the past 20 years; in 1990, Cuba produced 8.4 million tons of sugar while in

2014 it produced just 1.6 million tons.27

Cuba is highly dependent on Venezuela for its oil needs. In 2000, the two countries signed a

preferential oil agreement that provides Cuba with some 100,000 barrels of oil per day, about

two-thirds of its consumption. Cuba’s goal of becoming a net oil exporter with the development

of its offshore deepwater oil reserves was set back significantly in 2012 when three exploratory

oil drills were unsuccessful. (For more, see “Cuba’s Offshore Oil Development” below.) The

setback in Cuba’s offshore oil development combined with political and economic difficulties in

Venezuela have raised concerns among Cuban officials about the security of the support received

from Venezuela. Cuba is increasingly focusing on the need to diversify its trading partners and to

seek alternative energy suppliers in the case of a cutback or cutoff of Venezuelan oil.28

Over the years, Cuba has expressed pride for the nation’s accomplishments in health and

education. According to the U.N. Development Program’s 2014 Human Development Report,

Cuba is ranked 44 out of 187 countries worldwide and is characterized as having “very high

human development,” with life expectancy in Cuba in 2013 at 79.3 years and adult literacy was

estimated at almost 100%. The World Bank estimates that Cuba’s per capita income level was in

the upper middle income range ($4,086-$12,615) in 2012 (latest available), higher than a number

of countries in the Americas.29

Information and statistics were drawn from several sources: U.S. Department of State, “U.S. Relations with Cuba,”

August 30, 2013; Economist Intelligence Unit, “Cuba Country Report,” February 2013; Oficina Nacional de

Estadísticas, “Anuario Estadístico de Cuba, 2011”; and Marc Frank, “Cuban Sugar Out Tops Previous Harvest, But

Well Below Plan,” Reuters, May 19, 2014, and “Cuban Tourism Industry Stalls in 2013,” Reuters, July 30, 2014.

For example, see “Cuba, Economy, Seeking New Partners, Latin American Caribbean & Central America Report,

May 2013.

World Bank, World Development Report 2014, p. 298.

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In terms of economic growth, Cuba experienced severe economic deterioration from 1989 to

1993, with an estimated decline in gross domestic product ranging from 35% to 50% when the

Soviet Union collapsed and Russian financial assistance to Cuba practically ended. Since then,

however, there has been considerable improvement. From 1994 to 2000, as Cuba moved forward

with some limited market-oriented economic reforms, economic growth averaged 3.7% annually.

Economic growth was especially strong in the 2004-2007 period, registering an impressive 11%

and 12%, respectively, in 2005 and 2006 (see Figure 2). The economy benefitted from the growth

of the tourism, nickel, and oil sectors, and support from Venezuela and China in terms of

investment commitments and credit lines. However, the economy was hard hit by several

hurricanes and storms in 2008 and the global financial in 2009, with the government having to

implement austerity measures. As a result, economic growth slowed significantly.

Figure 2. Cuba: Real GDP Growth (percentage), 2004-2013

14.0%

12.1%

12.0%

11.2%

10.0%

8.0%

6.0%

7.3%

5.8%

4.1%

4.0%

2.8%

3.0%

2.7%

2010 2011

2012

2013

2.4%

2.0%

1.4%

0.0%

2004

2005

2006

2007

2008

2009

Source: Economist Intelligence Unit, Country Data Tool, 2014.

Since 2010, however, growth has improved modestly, with 2.4% growth in 2010, 2.8% in 2011,

3% in 2012, and 2.7% in 2013, according to the Economist Intelligence Unit (EIU). The forecast

for 2014, however, is for 1.2% growth, downgraded from EIU’s original forecast of 2.1% growth

because of Cuba’s challenges in shifting from a centrally planned to a more decentralized

economy.30 Cuban officials downgraded their own economic growth forecast for 2014 to 1.4%

from 2.2%.31 The EIU projects stronger growth rates averaging 4% in the 2015-2019 period, but

notes that the withdrawal of support from Venezuela would jeopardize these forecasts. Some

economists maintain that Cuba needs a growth rate of at least 5% to 7% in order to develop the

“Cuba Country Report,” Economist Intelligence Unit (EIU), November, 2014.

“Cuba Revises Down Economic Growth Estimate for 2014 to 1.4 Pct,” Reuters, June 23, 2014.

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Cuba: U.S. Policy and Issues for Congress

economy and create new jobs—increasing internal savings and attracting foreign investment

reportedly are keys to achieving such growth rates.32

The government of Raúl Castro has implemented a number of economic policy changes, but there

has been some disappointment that more far-reaching reforms have not been forthcoming. As

noted above, the government employs a majority of the labor force, almost 80%, but it has been

allowing more private sector activities. In 2010, the government opened up a wide range of

activities for self-employment and small businesses. There are now almost 200 categories of work

allowed, and the number of self-employed has risen from some 156,000 at the end of 2010 to

some 440,000 today.33 In 2013, some 125 non-agricultural cooperatives were established and the

government announced that 20 state-run restaurants would be converted to cooperatives in a pilot

project that could eventually lead to the conversion of hundreds of other state-run restaurants.34

Analysts contend, however, that the government needs to do more to support the development of

the private sector, including an expansion of authorized activities to include more white-collar

occupations and state support for credit to support small businesses. A major challenge for the

development of the private sector is the lack of money in circulation. Most Cubans do not make

enough money to support the development of small businesses; those private sector activities

catering to tourists and foreign diplomats have fared better than those serving the Cuban market.

The government’s decisions in 2013 to crack down on privately run movie and video game salons

and on private sales of imported clothes and hardware raised questions about its commitment to

the development of the private sector. In late December 2013, Raúl Castro issued a warning

against those engaging in economic activities not strictly authorized by the state, maintaining that

it creates an environment of impunity.35

When the Cuban Communist Party held its sixth congress in April 2011, it approved over 300

economic guidelines that, if implemented, include some potentially significant economic reforms.

These include the liquidation of state enterprises with financial losses, the creation of special

development zones for foreign investment, the gradual development of a tax system as a means to

distribute income, and a gradual elimination of the ration system.36 Some economic analysts,

however, maintained that the proposed changes were too limited and late to deal with the severity

of Cuba’s difficult economic situation.37

Marc Frank, “Factbox—Key Political Risks to Watch in Cuba,” Reuters News, May 13, 2013.

Andrea Rodriguez and Anne Marie Garcia, “2 Years Into Cuba’s Free Market Experiment, Small Entrepreneurs

Struggle to Stay Afloat,” Associated Press, December 27, 2013; Anne Marie Garcia, “Cuban Orders Immediate Ban on

3D, Other Movies, Video Games in Privately Run Businesses,” Associated Press, November 2, 2013.

Marc Frank, “Cuban State Begins to Move Out of the Restaurant Business,” Reuters News, August 26, 2013.

Michael Weissenstein and Andrea Rodriguez, “Raúl Castro Issues Stern Warning to Entrepreneurs Pushing

Boundaries of Cuba’s Economic Reforms,” Associated Press, December 21, 2013.

Lineamientos de la Política Económica y Social Del Partido y la Revolución, VI Congreso del Partido Comunista de

Cuba, approved April 18, 2011, available at http://thecubaneconomy.com/wp-content/uploads/2011/05/Lineamientosde-la-Pol%C3%ADtica-econ%C3%B3mica-y-Social-del-Partido-y-la-Revoluci%C3%B3n-Aprobado-el-18-de-abrilde-2011.-VI-Congreso-del-PCC.pdf. In addition, the Cuban Communist Party published a report comparing the original

291 guidelines to the final 313 guidelines and how they changed. See Información Sobre el Resultado del Debate de los

Lineamientos de la Política Económica y Social Del Partido y la Revolución, VI Congreso del Partido Comunista de

Cuba, May 2011, available at http://www.cubadebate.cu/wp-content/uploads/2011/05/

tabloide_debate_lineamientos.pdf.

Oscar Espinosa Chepe, Cambios en Cuba: Pocos, Limitados y Tardios, Havana Cuba, February 2011, available at

http://reconciliacioncubana.files.wordpress.com/2011/03/cambios-en-cuba.pdf.

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Among Cuba’s significant economic challenges are low wages (whereby workers cannot satisfy

basic human needs) and the related problem of how to unify Cuba’s two official currencies

circulating in the country.38 Most people are paid in Cuban pesos (CUPs) and the minimum

monthly wage in Cuba is about 225 pesos (about $9 U.S. dollars),39 but for increasing amounts of

consumer goods, convertible pesos (CUCs) are used. (For personal transactions, the exchange

rate for the two currencies is CUP24/CUC1.) Cubans with access to foreign remittances or who

work in jobs that give them access to convertible pesos are far better off than those Cubans who

do not have such access.

In October 2013, the Cuban government announced that it would move toward ending its dualcurrency system and move toward monetary unification. In March 2014, the government

provided insight about how monetary unification would move forward when it published

instructions for when the CUC is removed from circulation; no date was provided, but it was

referred to as day zero (día cero). There is significant uncertainty about the actual date and the

exchange rate system that will replace it.40 The currency reform is ultimately expected to lead to

productivity gains and improve the business climate, but the adjustment will create winners and

losers.41

A significant reform effort under Raúl Castro has focused on the agricultural sector, a vital issue

because Cuba reportedly imports some 60% of its food needs. In an effort to boost food

production, the government has turned over idle land to farmers and given farmers more control

over how to use their land and what supplies to buy. Despite these and other efforts, overall food

production has been significantly below targets. In 2012, Cuba’s coffee sector was hard hit by

Hurricane Sandy in October, and overall agricultural production reportedly underperformed for

the year. In November 2013, the Cuban government unveiled a new pilot program for the

provinces of Havana, Artemisa, and Mayabeque that will end the government’s monopoly on

food distribution in an effort to boost production.42

In March 2014, Cuba approved a new foreign investment law with the goal of attracting needed

foreign capital to the country. The law cuts taxes in profits by half to 15% and exempts

companies from paying taxes for the first eight years of operation. Employment or labor taxes are

also eliminated, although companies still must hire labor through state-run companies, with

agreed upon wages. A fast-track procedure for small projects reportedly will streamline the

approval process, and the government has agreed to improve the transparency and time of the

approval process for larger investments.43 It remains to be seen, however, to what extent the new

law will actually attract investment. Over the past several years, Cuba has closed a number of

joint ventures with foreign companies and has arrested several executives of foreign companies

For more on Cuba’s currency problem, see “Replacing Cuba’s Dual Currency System: What Are the Issues that

Really Matter?,” Latin American Economy & Business, July 2013.

U.S. Department of State, “Country Reports on Human Rights Practices for 2013, Cuba,” February 27, 2014.

“Cuba Country Report,” EIU, October 2014.

“Cuba: Exchange Rate Unification Approaching,” Latin America Regional Report: Caribbean & Central America,

March 2014.

Marc Frank, “Cuba Growing Less Food than 5 Ys Ago Despite Agriculture Reforms,” Reuters, August 31, 2012,

“Cuba Sees Economy Growing 3.1 Pct in 2012, Below Forecast,” Reuters, December 3, 2012, “Cuba Reports Little

Progress Five Years into Agricultural Reform,” Reuters, July 30, 2013, and “Cuba Rolls Out Master Plan for Food

Production and Distribution,” Reuters News, November 8, 2013.

“Cuba Approves New Foreign Investment Law,” Latin American Regional Report: Caribbean & Central America,

April 2014; “What’s Changed in Cuba’s New Foreign Investment Law,” Reuters News, March 29, 2014.

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Cuba: U.S. Policy and Issues for Congress

reportedly for corrupt practices. According to some observers, investors will want evidence, not

just legislation, that the government is prepared to allow foreign investors to make a profit in

Cuba.44 In October 2014, the Cuban government issued a list of some 246 projects in which it was

seeking some $8.7 billion in investment in such sectors as energy, tourism, agriculture, and

industry.45

In April 2014, the Cuban government loosened restrictions on hundreds of its largest state-run

companies that reportedly will be allowed to keep 50% of their profits after taxes, design their

own wage systems, sell excess product on the open market after meeting state quotas, and have

more flexibility in production and marketing decisions.46

A number of Cuba’s economists reportedly are pressing for the government to enact more farreaching reforms and embrace competition for key parts of the economy and state-run enterprises.

They criticize the government’s continued reliance on central planning and its monopoly in

foreign trade.47

For Additional Reading on the Cuban Economy

Association for the Study of the Cuban Economy, Annual Proceedings, available at

http://www.ascecuba.org/publications/annual-proceedings/.

Brookings Institution, webpage on Cuba, http://www.brookings.edu/research/topics/cuba;

Richard E. Feinberg and Ted Piccone, editors, Cuba’s Economic Change in Comparative Perspective, November 2014,

available at http://www.brookings.edu/research/papers/2014/11/cuba-economic-change-comparative-perspective;

Ted Piccone and Harold Trinkunas, The Cuba-Venezuela Alliance: The Beginning of the End? June 2004, available at

http://www.brookings.edu/research/papers/2014/06/16-cuba-venezuela-alliance-piccone-trinkunas;

Philip Peters, Cuba’s New Real Estate Market, February 2014, available at

http://www.brookings.edu/research/reports/2014/02/21-cuba-real-estate-market-peters; and

Richard Feinberg, Soft Landing in Cuba? Emerging Entrepreneurs and Middle Classes, November 2013, available at

http://www.brookings.edu/research/reports/2013/11/cuba-entrepreneurs-middle-classes-feinberg.

The Cuban Economy, La Economia Cubana, website maintained by Arch Ritter, from Carlton University,

Ottawa, Canada, available at http://thecubaneconomy.com/.

Revista Temas (Havana), links to the Cuban journal’s articles on Economy and Politics, in Spanish available at

http://www.temas.cult.cu/catalejo.php.

Oficina Nacional de Estadísticas, República de Cuba, (Cuba’s official economic statistics) available at

http://www.one.cu/.

Cuba’s Foreign Relations

During the Cold War, Cuba had extensive relations with and support from the Soviet Union, with

billions of dollars in annual subsidies to sustain the Cuban economy. This subsidy system helped

fund an activist foreign policy and support for guerrilla movements and revolutionary

Marc Frank, “Cuba Plans Big Tax Breaks to Lure Foreign Investors,” Reuters News, March 26, 2014; and Daniel

Trotta, “Cuba’s Past Raises Skepticism About New Foreign Investment Law,” Reuters News, March 31, 2014.

“Cuba Seeks $8.7 Bn in Foreign Investment,” EFE News Service, November 4, 2014.

Marc Frank, “Cuba’s Market Reforms Spread to Largest Companies,” Reuters News, April 28, 2014.

Marc Frank, “As Cuban Economy Stagnates, Economists Press for Deeper Reforms,” Reuters News, October 24,

2014.

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governments abroad in Latin America and Africa. With an end to the Cold War, the dissolution of

the Soviet Union, and the loss of Soviet financial support, Cuba was forced to abandon its

revolutionary activities abroad.

As its economy reeled from the loss of Soviet support, Cuba was forced to open up its economy

and economic relations with countries worldwide, and it developed significant trade and

investment linkages with Canada, Spain, other European countries, and China. Over the past

decade, Venezuela—under populist President Hugo Chávez—became a significant source of

support for Cuba, providing subsidized oil (some 100,000 barrels per day) and investment. For its

part, Cuba has sent thousands of medical personnel to Venezuela. In the aftermath of Chávez’s

death in early March 2013, the very close Venezuela presidential election in April 2013 won by

Nicolás Maduro of the ruling Socialist party, and Venezuela’s mounting economic challenges in

2014 because of the rapid decline in oil prices, Cuban officials are concerned about the future of

Venezuelan support in the medium to longer term.

In 2012, Cuba’s leading trading partners in terms of Cuban exports were Venezuela, the

Netherlands, Canada, and China (see Figure 3), while the leading sources of Cuba’s imports were

Venezuela, China, Spain, Brazil, and the United States (see Figure 4).

Figure 3. Cuban Exports by Country of Destination, 2012

Russia

Brazil

Dominican

Republic

Others

13%

Venezuela

45%

Nigeria

Panama

Spain

China

Canada

10%

Netherlands

12%

Source: Created by CRS based on information from República de Cuba, Oficina Nacional de Estadística e

Información, Anuario Estadístico de Cuba 2012, Sector Externo, Table 8.5, http://www.one.cu/aec2012/esp/

20080618_tabla_cuadro.htm.

Relations with Russia, which had diminished significantly in the aftermath of the Cold War, have

been strengthened somewhat over the past several years. In 2008, then-Russian President Dmitry

Medvedev visited Havana while Raúl Castro visited Russia in 2009 and again in 2012. Current

Russian President Vladimir Putin visited Cuba in July 2014 on his way to attend the BRICS

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summit in Brazil. Just before arriving in Cuba, Putin signed into law an agreement writing off

90% of Cuba’s $32 billion Soviet-era debt, with some $3.5 billion to be paid back by Cuba over a

10-year period that would fund Russian investment projects in Cuba.48 In the aftermath of Putin’s

trip, there were press reports alleging that Russia would reopen its signals intelligence facility at

Lourdes, Cuba, which had closed in 2002, but President Putin denied reports that his government

would reopen the facility.49

Figure 4. Cuban Imports by Country of Origin, 2012

France

Algeria

Others

17%

Venezuela

44%

Italy

Canada

Mexico

United States

Brazil

Spain

China

Source: Created by CRS based on information from República de Cuba, Oficina Nacional de Estadística e

Informacíon, Anuario Estadístico de Cuba 2012, Sector Externo, Table 8.6, http://www.one.cu/aec2012/esp/

20080618_tabla_cuadro.htm.

While trade relations between Russia and Cuba are not significant, two Russian energy

companies have been involved in oil exploration in Cuba, and a third announced its involvement

in 2014. Gazprom had been in a partnership with the Malaysian state oil company Petronas that

conducted unsuccessful deepwater oil drilling off of Cuba’s western coast in 2012. The Russian

oil company Zarubezhneft began drilling in Cuba’s shallow coastal waters east of Havana in

December 2012, but stopped work in April 2013 because of disappointing results (also see

“Cuba’s Offshore Oil Development” below). During President Putin’s July 2014 visit to Cuba,

Russian energy companies Rosneft and Zarubezhneft signed an agreement with Cuba’s state oil

company CubaPetroleo (Cupet) for the development of an offshore exploration block, and

Rosneft agreed to cooperate with Cuba in studying ways to optimize existing production at

That agreement had been discussed in a 2013 visit by now Prime Minister Medvedev to Cuba, and had been

announced in December 2013. Anna Andrianova and Bill Faries, “Russia Forgives $32B of Debt, Wants to Don

Business in Cuba,” Bloomberg News, July 13, 2014; Marc Frank, “Russia Signs Deal to Forgive $29 Biln of Cuba’s

Soviet-Era Debt – Diplomats,” Reuters, December 9, 2013; “Castro Declares He Had a Good Visit with Russia’s

Medvedev,” Agence France Presse, February 23, 2013.

“Putin Denies Russia to Reopen Soviet-era Spy Post in Cuba,” Reuters News, July 17, 2014.

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mature fields.50 Some energy analysts are skeptical about the prospects for the offshore project

given the unsuccessful attempts by foreign oil companies drilling wells in Cuba’s deepwaters.

(Also see “Cuba’s Offshore Oil Development” below.)

Relations with China have also increased in recent years. During the Cold War, the two countries

did not have close relations because of Sino-Soviet tensions, but bilateral relations have grown

close in recent years with Chinese trade and investment in Cuba increasing. Chinese President Hu

Jintao visited Cuba in 2004 and again in 2008, while Chinese Vice President Xi Jinping visited

Cuba in June 2011 and again in July 2014 as President after attending the BRIC summit in Brazil.

Raúl Castro had also visited China in 2012 on a four day visit, in which the two countries

reportedly signed cooperation agreements focusing on trade and investment issues. During Xi

Jinping’s 2014 visit, the two countries reportedly signed 29 trade, debt, credit, and other

agreements. While in Cuba, the Chinese President said that “China and Cuba being socialist

countries, we are closely united by the same missions, ideals, and struggles.”51

The European Union (EU) and Cuba held two rounds of talks in 2014—in April and August—on

a framework agreement for cooperation covering political, trade, and development issues, and

reports indicate that the two sides have made significant progress.52 In 1996, the EU adopted a

Common Positon on Cuba, stating that the objective of EU relations with Cuba includes

encouraging “a process of transition to pluralist democracy and respect for human rights and

fundamental freedoms.” The position also stipulated that full EU economic cooperation with

Cuba would depend upon improvements in human rights and political freedom.53

With El Salvador’s restoration of relations with Cuba in June 2009, all Latin American nations

now have official diplomatic relations with Cuba. Cuba has increasingly become more engaged in

Latin America beyond the already close relations with Venezuela. Cuba is a member of the

Bolivarian Alliance for the Americas, (ALBA), a Venezuelan-led integration and cooperation

scheme founded in 2004. In August 2013, Cuba began deploying thousands of doctors to Brazil in

a program aimed at providing doctors to rural areas of Brazil, with Cuba earning some $225

million a year for supplying the medical personnel.54 Brazil also has been a major investor in the

development of the port of Mariel west of Havana.

Cuba became a full member of the Rio Group of Latin American and Caribbean nations in

November 2008, and a member of the succeeding Community of Latin American and Caribbean

States (CELAC) that was officially established in December 2011 to boost regional cooperation,

but without the participation of the United States or Canada. In January 2013, CELAC held its

first summit in Chile, and Raúl Castro assumed the presidency of the organization for one year.

Cuba hosted the group’s second summit on January 28-29, 2014, in Havana, attended by leaders

from across the hemisphere as well as U.N. Secretary General Ban Ki-moon and OAS Secretary

General José Miguel Insulza. The U.N. Secretary General reportedly raised human rights issues

“Russia Cements Energy Ties with Latin America,” The Oil Daily, July 15, 2014.

Marc Frank, “Chinese President Ends Regional Tour in Cradle of Cuban Revolution,” Reuters News, July 23, 2014.

“EU and Cuba Make Progress on Association Agreement,” Cuba Briefing (a Caribbean Insight publication),

September 4, 2014.

European Union, Official Journal of the European Commission, “Common Position of 2 December 1996, defined by

the Council on the basis of Article J.2 of the Treaty on European Union, on Cuba,” (96/697/CFSP), December 2, 1996.

Anthony Boadle, “Cuban Doctors Tend to Brazil’s Poor, Giving Rousseff a Boost,” Reuters News, December 1,

2013.

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with Cuban officials, including the subject of Cuba’s ratification of U.N. human rights accords

and “arbitrary detentions” by the Cuban government.55 Dozens of dissidents were arrested or

detained in the lead-up to the summit. At the summit, Latin American nations approved a joint

declaration emphasizing nonintervention and pledging to respect “the inalienable right of every

state to choose its political, economic, social and cultural system.”56

Cuba had expressed interest in attending the sixth Summit of the Americas in April 2012 in

Cartagena, Colombia, but ultimately was not invited to attend. The United States and Canada

expressed opposition to Cuba’s participation. Previous summits have been limited to the

hemisphere’s 34 democratically elected leaders, and the OAS (in which Cuba does not

participate) has played a key role in summit implementation and follow-up activities. Several

Latin American nations vowed not to attend the next Summit of the Americas to be held in

Panama in April 2015 unless Cuba was allowed to participate, and as a result, Panama announced

in August 2014 that it would invite Cuba to attend. Cuba’s participation was a looming challenge

for the Obama Administration, but in December 2014, when President Obama announced a new

policy approach toward Cuba, he said that the United States was prepared to have Cuba join the

next summit. He emphasized, however, that human rights and democracy would be key summit

themes.

Cuba was excluded from participation in the OAS in 1962 because of its identification with

Marxism-Leninism, but in early June 2009, the OAS overturned the 1962 resolution in a move

that could eventually lead to Cuba’s reentry into the regional organization in accordance with the

practices, purposes, and principles of the OAS. While the Cuban government welcomed the OAS

vote to overturn the 1962 resolution, it asserted that it would not return to the OAS.57

Cuba is an active participant in international forums, including the United Nations and the

controversial United Nations Human Rights Council. Since 1991, the U.N. General Assembly has

approved a resolution each year criticizing the U.S. economic embargo and urging the United

States to lift it. Cuba also has received support over the years from the United Nations

Development Programme (UNDP) and the United Nations Educational, Scientific, and Cultural

Organization (UNESCO), both of which have offices in Havana. The U.N. has played a

significant role in providing relief and recovery from Hurricane Sandy that struck in October

2012. In November 2012, the U.N. system launched a Plan of Action (developed in cooperation

with the Cuban government) for $30.6 million to address the urgent needs of the population in the

following sectors: shelter and recovery, water sanitation and hygiene, food security, health, and

education.58

Among other international organizations, Cuba was a founding member of the World Trade

Organization, but it is not a member of the International Monetary Fund, the World Bank, or the

Inter-American Development Bank. Cuba hosted the 14th summit of the Non-aligned Movement

“UN Chief Pushes Cuba on ‘Arbitrary Detentions,’” Agence France Presse, January 28, 2014.

Peter Orsi, “LatAm Leaders Declare Region a ‘Zone of Peace,’” Associated Press, January 29, 2014.

For further background, see section on “Cuba and the OAS” in archived CRS Report R40193, Cuba: Issues for the

111th Congress, by (name redacted); also see CRS Report R42639, Organization of American States: Background and

Issues for Congress, by (name redacted).

U.N. OCHA, “Cuba, Plan of Action, Response to Needs Arising from Hurricane Sandy,” November 2012, available

at http://reliefweb.int/sites/reliefweb.int/files/resources/CUBA%20Action%20Plan%20FINAL.pdf.

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(NAM) in 2006, and held the Secretary Generalship of the NAM until its July 2009 summit in

Egypt.

North Korean Ship Incident59

On July 10, 2013, Panamanian authorities detained a North Korean freighter known as the Chong

Chon Gang, which made stops in Cuba, as it prepared to enter the Panama Canal because of

suspicion that the ship was carrying illicit narcotics. The ship, which had stops Cuba at Havana

and Puerto Padre (a major sugar export point), was taken to Panama’s international container port

of Manzanillo in Panama’s Colón province. When Panamanian authorities attempted to detain

and search the ship, the 35-member North Korean crew tried to prevent them, and the captain

attempted to commit suicide.60 Panama’s initial search of the ship found weapons hidden aboard

along with sugar. Panama’s then-President Ricardo Martinelli made a public radio broadcast to

that effect on July 15 and also tweeted a photo of some of the military equipment found.

Cuba’s Ministry of Foreign Affairs subsequently issued a statement on July 16 acknowledging

that the ship was loaded with 10,000 tons of sugar and 240 metric tons of “obsolete defensive

weapons” that had been manufactured in the mid-20th century and were to be “repaired and

returned to Cuba” in order to maintain the country’s defensive capability. Cuba maintained that

the weapons being transported on the ship were “two anti-aircraft missiles complexes Volga and

Pechora, nine missiles in parts and spares, two MiG-21 Bis and 15 motors for this type of

airplane.”61

Cuba’s statement raised questions as to why Cuba would make such an effort to repair what it

described as “obsolete defensive equipment.” Some press reports indicated that Cuba was

attempting to have the missile systems upgraded by North Korea. Jeffrey Lewis from the

Monterey Institute for International Studies maintains that the explanation that North Korea was

refurbishing Cuba’s anti-aircraft missiles was plausible since it clears up a mystery as to how

Cuba had been able to introduced new missile launchers in 2006 for two types of missiles.62 The

sugar could have been Cuba’s payment—essentially a barter arrangement for the repair/upgrade

of the weapons. For some analysts, however, the inclusion of the MiGs in the shipment raises

skepticism as to whether the MiGs and engines were going to be returned to Cuba. In 2011, North

Korea had attempted to acquire parts of MiG-21 jets from Mongolia, according to a June 2013

report by the U.N. Security Council’s Panel of Experts.63

Also see September 26, 2013, CRS testimony to Congress presented by Mary Beth Nikitin, Specialist in

Nonproliferation, before the House Committee on Foreign Affairs, Subcommittee on the Western Hemisphere, at a

hearing entitled “A Closer Look at Cuba and Its Recent History of Proliferation,” available at http://docs.house.gov/

meetings/FA/FA07/20130926/101353/HHRG-113-FA07-Wstate-NikitinM-20130926.pdf. Other hearing testimony is

available at http://foreignaffairs.house.gov/hearing/subcommittee-hearing-closer-look-cuba-and-its-recent-historyproliferation.

Rick Gladstone and David E. Sanger, “Panama Seizes Korean Ship, And Sugar-Coated Arms Parts,” New York

Times, July 17, 2013.

Cuba, Ministry of Foreign Affairs, “Statement by the Ministry of Foreign Affairs,” July 16, 2013.

Jeffrey Lewis, “Chen Chon Gang Interdiction,” Arms Control Wonk, Leading Blogs on Arms Control, Disarmament

and Non-proliferation, July 18, 2013, available at http://lewis.armscontrolwonk.com/archive/6705/chong-chon-ganginterdiction.

U.N. Security Council, Panel of Experts Pursuant to Resolution 1874 (2009), Report S/2013/337, June 13, 2013,

available at http://www.un.org/ga/search/view_doc.asp?symbol=S/2013/337.

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In late August 2013, the Stockholm International Peace Research Institute (SPRI) issued a report

maintaining that key parts of Cuba’s military shipment to North Korea “seem intended for

Pyongyang’s own use in its conventional military defenses, not to be repaired and returned to

Cuba.” In addition to the materiel that Cuba publicly acknowledged, the SPPRI report maintained

that the North Korean “ship also was transporting a variety of small arms and light weapons

(SALW) ammunition and conventional artillery ammunition for anti-tank guns and howitzer

artillery as well as generators, batteries, and night vision equipment, among other items.” Some of

this materiel was reported to be in “mint condition” and “clearly were not to be repaired and

returned to Cuba.”64

The discovery of the Chong Chon Gang shipment of weapons also raises questions about the

potential previous shipment of weapons from Cuba to North Korea and more broadly about the

nature of Cuban-North Korean relations. According to press reports, North Korean ships have

made several other trips to Cuba since 2009.65 The Wisconsin Project on Nuclear Arms Control

reports that two North Korean vessels, the O Un Chong Nyon Ho and the Mu Du Bong, traveled

to Cuba in May 2012 and May 2009 respectively.66 In particular, the O Un Chong Nyon Ho was

reported to have visited the same two Cuban ports as the Chong Chon Gang—Havana and the

sugar export center of Puerto Padre. Another North Korean ship, the Po Thong Gang, also

reportedly docked at Puerto Padre in April 2012, and at the ports of Havana and Santiago de Cuba

in 2011.67

Relations between Cuba and North Korea traditionally have not been thought to be significant.

During the Cold War, North Korea was an ideological partner of Cuba since both countries sided

with the Soviet Union, but the relationship was not thought to go beyond political and ideological

relations. Former Cuban President Fidel Castro acknowledged that North Korea had provided

100,000 Kalashnikov assault weapons to Cuba in the early 1980s.68 While North Korea has a

history of buying and selling arms around the world, it was not thought to have a significant arms

trade relationship with Cuba.69 Nevertheless, the recent visit of a high-level North Korean

military delegation to Cuba in early July 2013, less than 10 days before the detention of the

Chong Chon Gang, might provide some insight into the bilateral military relationship between the

two countries. The North Korean delegation, led by General Kim Kyok Sik, Chief of the Korean

People’s Army General Staff, met with Cuban President Raúl Castro, who stressed the historic

ties between the two countries and efforts to boost cooperative relations.70

Hugh Griffiths and Roope Siirtola, “Full Disclosure: Contents of North Korean Smuggling Ship Revealed,”

Stockholm International Peace Research Institute, published online by 38 North, a project of the U.S. Korean Institute

at Johns Hopkins School of Advanced International Studies, available at http://38north.org/2013/08/hgriffiths082713/.

Billy Kenber, “Soviet-Era Weaponry Found Hidden on North Korean Freighter,” Washington Post, July 21, 2013;

and Juan O. Tamayo, “Al Menos Cinco Cargueros Norcoreanos Han Visitado Cuba Desde el 2009,” El Nuevo Herald,

July 25, 2013.

“More on the North Korean Vessel Seized in Panama,” Wisconsin Project on Nuclear Arms Control, July 17, 2013,

available at http://www.wisconsinproject.org/pubs/editorials/chongchongang.htm.

Kenber, op. cit. and Tamayo, op. cit.

“Castro Says N.K. Supplied Free Weapons to Cuba,” The Korea Herald, August 16, 2013; and Peter Orsi, “Cuba’s

Fidel Castro Says He Never Imagined He’d Live to 87 When Serious Illness Struck in 2006,” AP Newswire, August 14,

2013.

Foster Klug, “A Look at North Korea’s Long History of Buying, Marketing and Selling Arms Around the World,”

Associated Press, July 17, 2013.

“North Korea Military Delegation Holds Talks With Cuban Leader,” BBC Monitoring Asia Pacific, July 2, 2013.

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Panama asked the U.N. Security Council to investigate the shipment and determine whether Cuba

violated U.N. sanctions banning weapons transfers to North Korea.71 In response, the U.N. Panel

of Experts for North Korea visited Panama August 13-15, 2013. In late August 2013, Panamanian

officials maintain that they were given a preliminary version that reportedly concluded that the

Cuban weapons found on the Chong Chon Gang “without doubt” violated U.N. sanctions.72

In early March 2014, the U.N. Security Council issued the Panel of Experts report, which stated

that the panel had concluded in its incident report that both the shipment itself and the transaction

between Cuba and North Korea were sanctions violations. The panel found that the “hidden cargo

... amounted to six trailers associated with surface-to-air missile systems and 25 shipping

containers loaded with two disassembled MiG-21 aircraft, 15 engines for MiG-21 aircraft,

components for surface to air missile systems, ammunition and miscellaneous arms-related

material.” The panel found that the “extraordinary and extensive efforts to conceal the cargo of

arms and related material ... and the contingency instructions ... found onboard the vessel for

preparing a false declaration for entering the Panama Canal ... point to a clear and conscious

intention to circumvent the resolutions.”73

On July 28, 2014, the U.N. Security Council imposed sanctions on the operator of the Chong

Chon Gang, Ocean Maritime Management Company, Ltd, (OMM), which “played a key role in

arranging the shipment of the concealed cargo of arms and related material.”74 The company is

now subject to an international asset freeze. U.S. Ambassador to the United Nations Samantha

Power described the North Korean ship incident as a “cynical, outrageous and illegal attempt by

Cuba and North Korea to circumvent United Nations sanctions.”75

U.S. Policy Toward Cuba

Background on U.S.-Cuban Relations76

In the early 1960s, U.S.-Cuban relations deteriorated sharply when Fidel Castro began to build a

repressive communist dictatorship and moved his country toward close relations with the Soviet

Union. The often tense and hostile nature of the U.S.-Cuban relationship is illustrated by such

events and actions as U.S. covert operations to overthrow the Castro government culminating in

the ill-fated April 1961 Bay of Pigs invasion; the October 1962 missile crisis in which the United

States confronted the Soviet Union over its attempt to place offensive nuclear missiles in Cuba;

Cuban support for guerrilla insurgencies and military support for revolutionary governments in

U.N. Security Council sanctions ban all weapons exports from North Korea, and all imports except small arms and

light weapons.

Lomi Kriel, “Panama Says Cuban Weapons Shipment ‘Without Doubt’ Violated UN Sanctions,” Reuters, August 28,

2013.

United Nations Security Council, Notes by the President of the Security Council, Report of the Panel of Experts

established pursuant to resolution 1874 (2009), S/1014/147, March 6, 2014, available at http://www.un.org/en/ga/

search/view_doc.asp?symbol=S/2014/147.

U.N. Security Council, “Security Council Committee Designates Entity Subject to Measures Imposed by Resolution

1718 (2006),” Press Release, July 28, 2014.

Michelle Nichols, “U.N. Blacklists Operator of North Korean Ship Seized in Panama,” Reuters, July 29, 2014.

For additional background, see archived CRS Report RL30386, Cuba-U.S. Relations: Chronology of Key Events

1959-1999, by (name redacted).

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Africa and the Western Hemisphere; the 1980 exodus of around 125,000 Cubans to the United

States in the so-called Mariel boatlift; the 1994 exodus of more than 30,000 Cubans who were

interdicted and housed at U.S. facilities in Guantanamo and Panama; and the February 1996

shootdown by Cuban fighter jets of two U.S. civilian planes operated by the Cuban American

group Brothers to the Rescue, which resulted in the death of four U.S. crew members.

Since the early 1960s, U.S. policy toward Cuba has consisted largely of isolating the island nation

through comprehensive economic sanctions, including an embargo on trade and financial

transactions. President Kennedy proclaimed an embargo on trade between the United States and

Cuba in February 1962,77 citing Section 620(a) of the Foreign Assistance Act of 1961 (FAA),

which authorizes the President “to establish and maintain a total embargo upon all trade between

the United States and Cuba.”78 At the same time, the Department of the Treasury issued the

Cuban Import Regulations to deny the importation into the United States of all goods imported

from or through Cuba.79 The authority for the embargo was later expanded in March 1962 to

include the Trading with the Enemy Act (TWEA).80

In July 1963, the Treasury Department revoked the Cuban Import Regulations and replaced them

with the more comprehensive Cuban Assets Control Regulations (CACR)—31 C.F.R. Part 515—

under the authority of TWEA and section 620(a) of the FAA.81 The CACR, which include a

prohibition on most financial transactions with Cuba and a freeze of Cuban government assets in

the United States, remain the main body of Cuba embargo regulations, and have been amended

many times over the years to reflect changes in policy. They are administered by the Treasury

Department’s Office of Foreign Assets Control (OFAC), and prohibit financial transactions as

well as trade transactions with Cuba. The CACR also require that all exports to Cuba be licensed

by the Department of Commerce, Bureau of Industry and Security, under the provisions of the

Export Administration Act of 1979, as amended.82

These sanctions were made stronger with the Cuban Democracy Act (CDA) of 1992 (P.L. 102484, Title XVII) and with the Cuban Liberty and Democratic Solidarity Act of 1996 (P.L. 104114), the latter often referred to as the Helms/Burton legislation. The CDA prohibits U.S.

subsidiaries from engaging in trade with Cuba and prohibits entry into the United States for any

sea-borne vessel to load or unload freight if it has been involved in trade with Cuba within the

previous 180 days. The Cuban Liberty and Democratic Solidarity Act, enacted in the aftermath of

Cuba’s shooting down of two U.S. civilian planes in February 1996, combines a variety of

measures to increase pressure on Cuba and provides for a plan to assist Cuba once it begins the

transition to democracy. Most significantly, the law codified the Cuban embargo, including all

restrictions under the CACR. This provision is noteworthy because of its long-lasting effect on

27 Federal Register 1085, February 7, 1962 (Proclamation 3447, Embargo on All Trade with Cuba, February 3,

1962).

Previously, in October 1960 under the Eisenhower Administration, exports to Cuba were placed under strict export

controls under the authority of the Export Control Act of 1949 in response to the expropriation of U.S. properties. This

in effect amounted to an embargo on exports of all products with the exception of certain foods, medicines, and

medical supplies.

27 Federal Register 1116, February 7, 1962.

27 Federal Register 2765-2766, March 24, 1962.

28 Federal Register 6974-6985, July 9, 1963.

31 C.F.R. § 515.533. The Export Administration Regulations (EAR) are found at 15 C.F.R. §§ 730-774. See

especially 15 C.F.R. § 746.2 on Cuba, which refers to other parts of the EAR.

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U.S. policy options toward Cuba. The executive branch is circumscribed in lifting the economic

embargo without congressional concurrence until certain democratic conditions are met, although

the CACR includes licensing authority that provides the executive branch with administrative

flexibility (e.g., travel-related restrictions in the CACR have been eased and tightened on

numerous occasions). Another significant sanction in the law is a provision in Title III that holds

any person or government that traffics in U.S. property confiscated by the Cuban government

liable for monetary damages in U.S. federal court. Acting under provisions of the law, however,

Presidents Clinton, Bush, and now Obama have suspended the implementation of Title III at sixmonth intervals.

In addition to sanctions, another component of U.S. policy, a so-called second track, consists of

support measures for the Cuban people. This includes U.S. private humanitarian donations,

medical exports to Cuba under the terms of the Cuban Democracy Act of 1992, U.S. government

support for democracy-building efforts, and U.S.-sponsored radio and television broadcasting to

Cuba. In addition, the 106th Congress approved the Trade Sanctions Reform and Export

Enhancement Act of 2000 (P.L. 106-387, Title IX) that allows for agricultural exports to Cuba,

albeit with restrictions on financing such exports. This led to the United States becoming one of

Cuba’s largest suppliers of agricultural products.

Clinton Administration’s Easing of Sanctions

The Clinton Administration made several changes to U.S. policy in the aftermath of Pope John

Paul II’s 1998 visit to Cuba, which were intended to bolster U.S. support for the Cuban people.

These included the resumption of direct flights to Cuba (which had been curtailed after the

February 1996 shootdown of two U.S. civilian planes), the resumption of cash remittances by

U.S. nationals and residents for the support of close relatives in Cuba (which had been curtailed

in August 1994 in response to the migration crisis with Cuba), and the streamlining of procedures

for the commercial sale of medicines and medical supplies and equipment to Cuba.

In January 1999, President Clinton announced several additional measures to support the Cuban

people. These included a broadening of cash remittances to Cuba, so that all U.S. residents (not

just those with close relatives in Cuba) could send remittances to Cuba; an expansion of direct

passenger charter flights to Cuba from additional U.S. cities other than Miami (direct flights later

in the year began from Los Angeles and New York); and an expansion of people-to-people

contact by loosening restrictions on travel to Cuba for certain categories of travelers, such as

professional researchers and those involved in a wide range of educational, religious, and sports

activities.

Bush Administration’s Tightening of Sanctions

The George W. Bush Administration essentially continued the two-track U.S. policy of isolating

Cuba through economic sanctions while supporting the Cuban people through a variety of

measures. However, within this policy framework, the Administration emphasized stronger

enforcement of economic sanctions and further tightened restrictions on travel, remittances, and

humanitarian gift parcels to Cuba. The Administration established an interagency Commission for

Assistance to a Free Cuba in late 2003 tasked with identifying means “to help the Cuban people

bring about an expeditious end of the dictatorship” and to consider “the requirements for United

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States assistance to a post-dictatorship Cuba.”83 In issuing its first report in May 2004, the

commission made recommendations to tighten restrictions on family visits and other categories of

travel and on private humanitarian assistance in the form of remittances and gift parcels.84 The

Administration subsequently issued these tightened restrictions in June 2004, while in February

2005, it tightened restrictions on payment terms for U.S. agricultural exports to Cuba. The

commission issued a second and final report in July 2006 that made recommendations to hasten

political change in Cuba toward a democratic transition and led to a substantial increase in U.S.

funding to support democracy and human rights efforts in Cuba.

The Bush Administration continued to emphasize a continuation of the sanctions-based approach

toward Cuba pending political change in Cuba. When Raúl Castro officially became head of state

in February 2008, then-Secretary of State Condoleezza Rice issued a statement urging “the Cuban

government to begin a process of peaceful, democratic change by releasing all political prisoners,

respecting human rights, and creating a clear pathway towards free and fair elections.”85 In

remarks on Cuba policy in March 2008, President Bush maintained that in order to improve U.S.Cuban relations, “what needs to change is not the United States; what needs to change is Cuba.”

The President asserted that Cuba “must release all political prisoners ... have respect for human

rights in word and deed, and pave the way for free and fair elections.”86

Obama Administration Policy

During its first six years, the Obama Administration continued the dual-track policy approach

toward Cuba in place for many years. It largely maintained U.S. economic sanctions and it

continued measures to support the Cuban people, such as U.S. government-sponsored radio and

television broadcasting and funding for democracy and human rights projects. At the same time,

however, the Obama Administration initiated a significant shift in policy toward Cuba beginning

in 2009 with its efforts to reach out to the Cuban people through the easing of restrictions on

family travel and remittances. New measures were introduced in 2011 to further reach out to the

Cuban people through increased purposeful travel and an easing of restrictions on non-family

remittances. The Administration also sought to engage Cuba in an effort to improve relations,

although Cuba’s imprisonment of USAID subcontractor Alan Gross in December 2009 was an

impediment to improved relations.

Just after the adjournment of the 113th Congress, however, President Obama announced on

December 17, 2014, that Cuba was releasing Alan Gross on humanitarian grounds and unveiled

major changes in U.S. policy toward Cuba, including a restoration of diplomatic relations and

new efforts toward engagement. The President maintained that the United States would continue

to raise concerns about democracy and human rights in Cuba, but stated that “we can do more to

support the Cuban people and promote our values through engagement.” According to the

President: “After all, these 50 years have shown that isolation has not worked. It’s time for a new

approach.”87

U.S. Department of State, “Commission for Assistance to a Free Cuba,” White House Fact Sheet, December 8, 2003.

See the commission’s May 2004 report, available at http://pdf.usaid.gov/pdf_docs/PCAAB192.pdf.

U.S. Department of State, Secretary of State Condoleezza Rice, “Statement on Cuba’s Transition,” February 24,

2008.

White House, “President Bush Delivers Remarks on Cuba,” March 7, 2008.

White House, “Statement by the President on Cuba Policy Changes,” December 17, 2014.

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Cuba: U.S. Policy and Issues for Congress

Background on the First Six Years of U.S. Policy Under President Obama

In April 2009, the Obama Administration fulfilled a campaign pledge and announced it would lift

all restrictions on family travel and remittances. The Administration went further in January 2011

when it announced new measures to ease travel restrictions and to allow all Americans to send

remittances to Cuba. The measures increased purposeful travel to Cuba related to religious,

educational, and journalistic activities, including people-to-people travel exchanges; authorized

any U.S. person to send remittances to non-family members in Cuba; made it easier for religious

institutions to send remittances for religious activities; and allowed all U.S. international airports

to apply to provide flights to and from Cuba.

In 2012 congressional testimony, Assistant Secretary of State for Western Hemisphere Affairs

Roberta Jacobson asserted that “the Obama Administration’s priority is to empower Cubans to

freely determine their own future.” She maintained that “the most effective tool we have for

doing that is building connections between the Cuban and American people, in order to give

Cubans the support and tools they need to move forward independent of their government.” The

Assistant Secretary maintained that “the Administration’s travel, remittance and people-to-people

policies are helping Cubans by providing alternative sources of information, taking advantage of

emerging opportunities for self-employment and private property, and strengthening civil

society.”88

When the Obama Administration took office in 2009, it initiated a policy to engage with the

Cuban government in an effort to improve relations. At the April 2009 Summit of the Americas,

President Obama announced that “the United States seeks a new beginning with Cuba.” While

recognizing that it would take time to “overcome decades of mistrust,” the President said “there

are critical steps we can take toward a new day.” He stated that he was prepared to have his

Administration “engage with the Cuban government on a wide range of issues—from drugs,

migration, and economic issues, to human rights, free speech, and democratic reform.” The

President maintained that he was “not interested in talking just for the sake of talking,” but said

that he believed that U.S.-Cuban relations could move in a new direction.89 In the aftermath of the

Summit, there appeared to be some momentum toward improved relations. In July 2009, Cuba

and the United States restarted the semi-annual migration talks that had been suspended by the

United States five years earlier. In September 2009, the United States and Cuba held talks in

Havana on resuming direct mail service between the two countries that included discussion on

issues related to the transportation, quality, and security of mail service.

Relations took a turn for the worse in December 2009, however, when Alan Gross, an American

subcontractor working on Cuba democracy projects funded by the U.S. Agency for International

Development (USAID) was arrested in Havana state for providing Internet communications

equipment to Cuba’s Jewish community. Gross was convicted in March 2011, and sentenced to

15 years in prison. U.S. officials and Members of Congress repeatedly raised the issue with the

Cuban government and asked for his release. In the aftermath of Gross’s conviction, the United

States and Cuba continued to cooperate on such issues as antidrug efforts and oil spill prevention,

U.S. Department of State, “The Path to Freedom Countering Repression and Strengthening Civil Society in Cuba,”

Testimony by Roberta S. Jacobson, Assistant Secretary, Bureau of Western Hemisphere Affairs, Senate Foreign

Relations Committee, Subcommittee on the Western Hemisphere, June 7, 2012, available at http://www.state.gov/p/

wha/rls/rm/2012/191935.htm.

White House, “Remarks by the President at the Summit of the Americas Opening Ceremony,” April 17, 2009.

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Cuba: U.S. Policy and Issues for Congress

preparedness, and response, but improvement of relations in other areas appeared to have been

stymied because of the Gross case.

Beginning in mid-2013, there was renewed engagement with Cuba on several fronts, including

direct mail service talks, resumed migration talks, and a preliminary agreement on air and

maritime search and rescue.

•

Talks for direct mail service between the United States on Cuba were held in

June 2013 in Washington, DC, and September 2013 in Havana.90 As noted above,

previous talks in 2009 did not lead to a resumption of direct mail service. The

State Department reportedly characterized the September talks as “fruitful,” and

maintained in a statement that “the goal of the talks is for the United States and

Cuba to work out the details for a pilot program to directly transport mail

between the two countries.”91

•

After an 18-month hiatus, the Obama Administration resumed semi-annual

migration talks in July 2013, while two more rounds were held in January and

July 2014. U.S. and Cuban officials issued positive statements after each round

(for more details on the talks, see “Migration Issues” below).

•

In September 2013, the United States and Cuba reportedly agreed to a

preliminary procedure on air and maritime search and rescue. The U.S. Coast

Guard led the U.S. delegation in Havana, and the talks reportedly stressed the

importance of such cooperation to save lives of people in danger.92 The January

2014 migration talks also included discussion of aviation safety and maritime

search and rescue protocols. At the July 2014 migration talks, the Cuban

delegation said that both governments had agreed earlier in the month to enforce

procedures for search and rescue operations in order to saves lives. (See

“Migration Issues” below.)

In November 2013, President Obama and Secretary of State John Kerry both delivered remarks

regarding U.S. policy toward Cuba. At a Democratic Party fundraising event on November 8 in

Miami, President Obama maintained that with regard to policy toward Cuba, “we have to be

creative ... we have to be thoughtful ... and we have to continue to update our policies.” He

contended that “the notion that the same polices that we put in place in 1961 would somehow still

be as effective as they are today in the age of the Internet and Google and world travel doesn’t

make sense.”93 In a November 18, 2013, address on U.S.-Latin American relations at the

Organization of American States, Secretary of State Kerry reiterated the President’s remarks. He

Since the early 1960s, mail to and from Cuba has arrived via third countries, which results in extensive delays in mail

between the two countries. The Cuban Democracy Act of 1992 (P.L. 102-484, Title XVII, §1705(f)) has a provision

requiring the U.S. Postal Service to take necessary actions to provide direct mail service to and from Cuba, including,

in the absence of common carrier service between the 2 countries, the use of charter service providers. Past U.S.

attempts to negotiate such service were rejected by Cuba, reportedly because Cuba wanted the issue to be part of a

larger normalization of commercial air traffic. Both the Clinton and Bush Administrations had called for negotiations to

restore direct mail service.

Marc Frank, “U.S. and Cuba Talk about Resuming Direct Mail Service,” Reuters News, September 17, 2013.

“Cuba, U.S. Reach Maritime Rescue Agreement,” Agence France Presse, September 21, 2013; “Cuba, U.S. Agree to

Preliminary Procedure for Aeronautical, Maritime Rescue,” Philippines News Agency, September 22, 2013.

The White House, Office of the Press Secretary, “Remarks by the President at a DSCC Fundraising Reception,”

Miami, Florida, November 8, 2013, available at http://www.whitehouse.gov/the-press-office/2013/11/08/remarkspresident-dscc-fundraising-reception-0.

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Cuba: U.S. Policy and Issues for Congress

also maintained that the United States and Cuba “are finding some cooperation on common

interests at this point in time,” and that “we also welcome some of the changes that are taking

place in Cuba which allow more Cubans to be able to travel freely and work for themselves.” At

the same time, however, the Secretary cautioned that changes in Cuba “should absolutely not

blind us to the authoritarian reality of life for ordinary Cubans.” He contended that “in a

hemisphere where people can criticize their leaders without fear of arrest or violence, Cubans

cannot. And if more does not change soon, it is clear that the 21st century will continued,

unfortunately, to leave the Cuban people behind.”94

Considerable international press focused on the handshake between President Obama and

President Castro on December 10, 2013, at the memorial service for Nelson Mandela in South

Africa. U.S. officials maintain that the handshake was not planned, but rather, that the focus of

President Obama was on Mandela. Some analysts contended that the handshake could portend a

sign of thawing relations while others maintained that sometimes a handshake is just a handshake.

Critics of the Cuban government, including some Members of Congress, criticized the President

for shaking hands with a leader with such a poor human rights record.

Human rights violations have remained a fundamental concern regarding Cuba under the Obama

Administration. President Obama and the State Department continued to issue statements

expressing concern about violations as they occur, including the death of hunger strikers in 2010

and 2012 and targeted repression against dissidents and human rights. U.S. officials lauded the

release of dozens of Cuban political prisoners in 2010 and 2011, but maintained that their release

did not change the government’s poor human rights record as it continued to resort to repeated

short-term detentions.95 In October 2013, Under Secretary of State for Political Affairs Wendy

Sherman met with Berta Soler, spokesperson for the Ladies in White, and expressed concern over

Cuba’s “continued suppression of peaceful activities carried out by Damas de Blanco and other

civil society groups.”96 In November 2013, President Obama met Berta Soler and another

prominent Cuban dissident, Guillermo Fariñas, at an event in Miami, Florida, and Secretary of

State Kerry, as noted above, addressed the OAS and reiterated concerns about human rights and

freedom of expression in Cuba. In December 2013, the State Department issued a statement

deploring “the Cuban government’s harsh tactics to impede Cuban civil society’s peaceful

recognition of Human Rights Day.”97

The State Department’s statements on the human rights situation in Cuba in 2014 included:

•

In February 2014, the State Department issued a statement expressing deep

concern about the “recent increase in arbitrary detentions, physical violence, and

other abusive actions carried out by the Cuban government against peaceful

human and civil rights advocates.”98

U.S. Department of State, “Remarks on U.S. Policy in the Western Hemisphere,” November 18, 2013, available at

http://www.state.gov/secretary/remarks/2013/11/217680.htm.

U.S. Department of State, “The Path to Freedom Countering Repression and Strengthening Civil Society in Cuba,”

Testimony by Roberta S. Jacobson, Assistant Secretary, Bureau of Western Hemisphere Affairs, Senate Foreign

Relations Committee, Subcommittee on the Western Hemisphere, June 7, 2012.

U.S. Department of State, Daily Press Briefing, October 24, 2013.

U.S. Department of State, “Crackdown on Cuban Civil Society’s Human Rights Day Events,” Press Statement,

December 12, 2013.

U.S. Department of State, “Detentions of Activists in Cuba,” Press Statement, February 10, 2014.

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Cuba: U.S. Policy and Issues for Congress

•

In June 2014, the State Department released a statement in response to the latest

arbitrary detentions by Cuban authorities of dozens of civil society members and

activists and the violent assault of an independent journalist, Roberto de Jesus

Guerra. The State Department condemned “the Cuban government’s systematic

use of physical violence and arbitrary detention.”99

•

On July 14, 2014, the State Department issued a statement condemning the

detention of more than 100 members of the Ladies in White who were seeking to

commemorate the 20-year anniversary of the loss of life when the Cuban

government sank a tugboat known as the “13 de Marzo” as it attempted to leave

Cuba.100

Securing the release of Alan Gross from prison in Cuba also remained a top U.S. priority. The

State Department maintained that it was using every appropriate channel to press for his release,

including the Vatican. As noted by the State Department in early May 2014, Gross’s continued

well-being remained an impediment to more constructive bilateral relations.101

President Obama Unveils a New Policy Approach Toward Cuba

On December 17, 2014, President Obama announced major developments in U.S.-Cuban

relations. First, he announced that the Cuban government had released USAID subcontractor Alan

Gross on humanitarian grounds after five years imprisonment. (For background, see

“Imprisonment and Ultimate Release of USAID Subcontractor Alan Gross” below.) As noted

above, Gross’s continued imprisonment was an impediment to an improvement in U.S.-Cuban

relations.

The President also announced that, in a separate action, the Cuban government released “one of

the most important intelligence assets that the United States has ever had in Cuba” in exchange

for three Cuban intelligence agents who had been imprisoned in the United States since 1998 (for

background, see “Cuban Five—Remaining Three Released” below). Media reports identified the

U.S. intelligence asset as Rolando Sarraff Trujillo, a cryptographer in Cuba’s Directorate of

Intelligence, who reportedly provided information that helped the FBI dismantle three Cuban spy

networks in the United States.102

Most significantly, in the aftermath of having secured the release of Gross and the U.S.

intelligence asset, President Obama announced a major shift in U.S. policy toward Cuba, moving

away from a sanctions-based policy aimed at isolating Cuba to a policy of engagement. The

President said that his Administration “will end an outdated approach that, for decades, has failed

to advance our interests, and instead we will begin to normalize relations between our two

countries.” The President maintained that the United States would continue to speak out on

human rights and democracy issues, but stressed that more could be done to support the Cuban

people through engagement.

U.S. Department of State, “Detentions of Activists in Cuba,” Press Statement, June 12, 2014.

U.S. Department of State, “Detentions of Dozens of Activists in Cuba,” Press Statement, July 14, 2014.

101

U.S. Department of State, “Continued Detention of Alan Gross,” Press Statement, May 2, 2014.

102

Adam Goldman and Missy Ryan, “Spy Helped Unmask 3 Cuban Spy Networks, U.S. Officials Say,” Washington

Post, December 18, 2014.

100

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Cuba: U.S. Policy and Issues for Congress

The President outlined three major steps to move toward normalization:

•

reestablishment of diplomatic relations with Cuba (relations were severed in

1961);

•

a review of Cuba’s designation by the Department of State as a state sponsor of

international terrorism (Cuba has been on the list since 1982; see “Terrorism

Issues” for background ); and

•

an increase in travel, commerce, and the flow of information to and from Cuba.

A White House fact sheet listed numerous policy changes to implement the third step. These

include:

•

facilitating an expansion of travel by authorizing general licenses for the existing

12 categories of travel authorized by law;

•

increasing permissible remittances by U.S. persons to Cuban nationals from $500

to $2,000 per quarter;

•

expanding commercial sales/exports to Cuba of certain goods and services to

empower Cuba’s nascent private sector, including authorization for certain

building materials for private residential construction, goods for use by private

sector Cuban entrepreneurs, and agricultural equipment for small farmers;

•

authorizing licensed travelers to import $400 worth of goods from Cuba, with no

more than $100 for tobacco products and alcohol combined;

•

permitting U.S. financial institutions to open correspondent accounts at Cuban

financial institutions to facilitate authorized transactions;

•

revising the definition of “cash in advance” for authorized trade with Cuba to

specify that it means “cash before transfer of title” for payment (for background,

see “U.S. Agricultural Exports and Sanctions” below);

•

permitting the use of U.S. credit and debit cards by authorized travelers to Cuba;

•

permitting the commercial sale of certain consumer communication devices,

related software, applications, hardware, and services, and items for the

establishment and update of communications-related systems;

•

permitting telecommunications providers to establish the necessary mechanisms

in Cuba, including infrastructure, to provide commercial telecommunications and

Internet services; and

•

providing a general license for U.S.-owned or controlled entities in third

countries to provide services to, and engage in financial transactions with, Cuban

individuals in third countries.

These actions will require changes to U.S. embargo regulations administered by the Department

of the Treasury, Office of Foreign Assets Control (Cuban Assets Control Regulations; 31 CFR

Part 515) and the Department of Commerce, Bureau of Industry and Security (Export

Administration Regulations; 15 CFR Parts 730-774).

While the changes to the embargo regulations have not yet been issued (Administration officials

expect the changes within the next several weeks), they appear—as described by the White

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Cuba: U.S. Policy and Issues for Congress

House—to be within the scope of the President’s discretionary licensing authority to make

changes to the embargo regulations, and somewhat similar to various policy changes made by

President Obama and his predecessors to ease or strengthen the embargo restrictions.103 The new

policy changes build upon previous changes that President Obama took in 2009, when he lifted

all restrictions on family travel and remittances to family in Cuba, and in 2011, when he took

action to increase purposeful travel to Cuba, such as people-to-people educational trips.

The President acknowledged that he does not have the authority to lift the embargo because it was

codified into legislation (Section 102(h) of the Cuban Liberty and Democratic Solidarity

[LIBERTAD] Act of 1996, P.L. 104-114). The President maintained that he looks forward to

engaging Congress in a debate about lifting the embargo. The LIBERTAD Act ties the lifting of

the embargo to conditions in Cuba (including that a democratically elected government is in

place). Lifting the overall economic embargo at this time would require amending or repealing

that law as well as other statutes, such as the Cuban Democracy Act of 1992 (Title XVII of P.L.

102-484) and the Trade Sanctions Reform and Export Enhancement Act of 2000 (P.L. 106-387),

that have provisions impeding normal economic relations with Cuba.

The President also indicated that his Administration was prepared to have Cuba join the Summit

of the Americas to be held in Panama in April 2015. The White House emphasized that human

rights and democracy will be key themes of the summit, and asserted that Cuban civil society

must be allowed to participate with civil society from other countries participating in the summit.

Cuba’s participation in the summit was a looming challenge for the Administration since it had

opposed Cuba’s participation in the 2012 Summit of the Americas in Colombia. Several Latin

American nations had vowed not to participate in the 2015 summit if Cuba was not invited. (For

background, also see “Cuba’s Foreign Relations” below.)

Debate on the Direction of U.S. Policy

Over the years, although U.S. policy makers have agreed on the overall objectives of U.S. policy

toward Cuba—to help bring democracy and respect for human rights to the island—there have

been several schools of thought about how to achieve those objectives. Some have advocated a

policy of keeping maximum pressure on the Cuban government until reforms are enacted, while

continuing efforts to support the Cuban people. Others argue for an approach, sometimes referred

to as constructive engagement, that would lift some U.S. sanctions that they believe are hurting

the Cuban people, and move toward engaging Cuba in dialogue. Still others call for a swift

normalization of U.S.-Cuban relations by lifting the U.S. embargo. Legislative initiatives

introduced over the past decade have reflected these three policy approaches.

Over the past decade, there have been efforts in Congress to ease U.S. sanctions, with one or both

houses at times approving amendments to appropriations measures that would have eased U.S.

sanctions on Cuba. Until 2009, these provisions were stripped out of final enacted measures, in

part because of presidential veto threats. In March 2009, Congress took action to ease some

restrictions on travel to Cuba, marking the first time that Congress has eased Cuba sanctions since

the approval of the Trade Sanctions Reform and Export Enhancement Act of 2000.

103

For example, see the following 2009 GAO report: U.S. Government Accountability Office, U.S. Embargo on Cuba:

Recent Regulatory Changes and Potential Presidential or Congressional Actions, GAO-09-951R, September 17, 2009,

available at http://www.gao.gov/products/GAO-09-951R.

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In light of Fidel Castro’s departure as head of government and the gradual economic changes

being made by Raúl Castro, some observers called for a reexamination of U.S. policy toward

Cuba. In this new context, two broad policy approaches have been advanced to contend with

change in Cuba: an approach that maintains the U.S. dual-track policy of isolating the Cuban

government while providing support to the Cuban people; and an approach aimed at influencing

the attitudes of the Cuban government and Cuban society through increased contact and

engagement.

In general, those who advocate easing U.S. sanctions on Cuba make several policy arguments.

They assert that if the United States moderated its policy toward Cuba—through increased travel,

trade, and dialogue—then the seeds of reform would be planted, which would stimulate forces for

peaceful change on the island. They stress the importance to the United States of avoiding violent

change in Cuba, with the prospect of a mass exodus to the United States. They argue that since

the demise of Cuba’s communist government does not appear imminent, even without Fidel

Castro at the helm, the United States should espouse a more pragmatic approach in trying to bring

about change in Cuba. Supporters of changing policy also point to broad international support for

lifting the U.S. embargo, to the missed opportunities for U.S. businesses because of the unilateral

nature of the embargo, and to the increased suffering of the Cuban people because of the

embargo. Proponents of change also argue that the United States should be consistent in its

policies with the world’s few remaining communist governments, including China and Vietnam.

On the other side, opponents of changing U.S. policy maintain that the two-track policy of

isolating Cuba, but reaching out to the Cuban people through measures of support, is the best

means for realizing political change in Cuba. They point out that the Cuban Liberty and

Democratic Solidarity Act of 1996 sets forth the steps that Cuba needs to take in order for the

United States to normalize relations. They argue that softening U.S. policy without concrete

Cuban reforms would boost the Castro government, politically and economically, and facilitate

the survival of the communist regime. Opponents of softening U.S. policy argue that the United

States should stay the course in its commitment to democracy and human rights in Cuba, and that

sustained sanctions can work. Opponents of loosening U.S. sanctions further argue that Cuba’s

failed economic policies, not the U.S. embargo, are the causes of Cuba’s difficult living

conditions.

Public opinion polls show a majority of Americans support normalizing relations with Cuba,

although the number is more closely split among Cuban Americans in Miami-Dade County in

Florida. A February 2014 poll by the Atlantic Council found that 56% of respondents nationwide

supported normalizing or engaging more directly in Cuba and that 63% or respondents in Florida

supported such a change.104 Since the early 1990s, Florida International University (FIU) has

conducted polling on the Cuban American community in Miami-Dade County regarding U.S.

policy toward Cuba. FIU’s 2014 poll, issued in June 2014, showed a slight majority of Cuban

Americans in Miami-Dade County, 52%, opposed the embargo, although that support dropped to

51% among registered voters. The FIU poll also showed that a large majority of Cuban

Americans in Miami Dade, 69%, supported the lifting of travel restrictions for all Americans to

travel to Cuba.105

104

Atlantic Council, Adrienne Arsht Latin American Center, U.S-Cuba, A New Public Survey Supports Policy Change,

February 11, 2014, available at http://www.atlanticcouncil.org/publications/reports/us-cuba-a-new-public-surveysupports-policy-change.

105

Florida International University, Cuban Research Institute, 2014 FIU Cuba Poll, How Cuban Americans in Miami

(continued...)

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Cuba: U.S. Policy and Issues for Congress

With regard to President Obama’s announcement of a new direction for U.S. policy toward Cuba

in December 2014, some Members of Congress lauded the Administration’s actions as in the best

interests of the United States and a better way to support change in Cuba, while other Members

strongly criticized the President for not obtaining concessions from Cuba to advance human

rights. With some Members vowing to oppose the Administration’s efforts toward normalization,

the direction of U.S.-Cuban relations is likely to be hotly debated in the 114th Congress.

Issues in U.S.-Cuban Relations

For many years, Congress has played an active role in U.S. policy toward Cuba through the

enactment of legislative initiatives and oversight on the many issues that comprise policy toward

Cuba. These include U.S. restrictions on travel and remittances to Cuba; U.S. agricultural exports

to Cuba with conditions; funding and oversight of U.S.-government sponsored democracy and

human rights projects; the imprisonment of USAID subcontractor Alan Gross in Cuba since

December 2009; funding and oversight for U.S.-government sponsored broadcasting to Cuba

(Radio and TV Martí); terrorism issues; migration issues; bilateral anti-drug cooperation; and the

status of Cuba’s offshore oil development, including efforts to ensure adequate oil spill

prevention, preparedness, and response efforts.

U.S. Restrictions on Travel and Remittances106

Restrictions on travel to Cuba have been a key and often contentious component of U.S. efforts to

isolate the communist government of Fidel Castro for much of the past 50+ years. Over time

there have been numerous changes to the restrictions and for five years, from 1977 until 1982,

there were no restrictions on travel. Restrictions on travel and remittances to Cuba are part of the

CACR, the overall embargo regulations administered by the Treasury Department’s Office of

Foreign Assets Control (OFAC).

Under the George W. Bush Administration, enforcement of U.S. restrictions on Cuba travel

increased, and restrictions on travel and on private remittances to Cuba were tightened. In 2003,

the Administration eliminated travel for people-to-people educational exchanges that had begun

under the Clinton Administration. In 2004, the Administration imposed further restrictions on

travel, especially family travel and the provision of private humanitarian assistance to Cuba in the

form of remittances and gift parcels.

Under the Obama Administration, Congress took legislative action in March 2009 easing

restrictions on family travel (restoring the restrictions to as they were under the Clinton

Administration) and on travel related to U.S. agricultural and medical sales to Cuba (P.L. 111-8,

Sections 620 and 621 of Division D). In April 2009, the Obama Administration went further when

the President announced that he was lifting all restrictions on family travel as well as restrictions

on cash remittances to family members in Cuba.

(...continued)

View U.S. Policies Toward Cuba, June 17, 2014, available at: https://cri.fiu.edu/news/2014/cuban-americans-favormore-nuanced-policy/2014-fiu-cuba-poll.pdf

106

For additional information, see CRS Report RL31139, Cuba: U.S. Restrictions on Travel and Remittances, by (name

redacted).

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In January 2011, the Obama Administration made a series of changes further easing restrictions

on travel and remittances to Cuba. The measures (1) increased purposeful travel to Cuba related

to religious, educational, and journalistic activities, including people-to-people travel exchanges;

(2) allowed any U.S. person to send remittances to non-family members in Cuba (up to $500 per

quarter) and made it easier for religious institutions to send remittances for religious activities;

and (3) allowed U.S. international airports to become eligible to provide services to licensed

charter flights to and from Cuba.

In most respects, these new measures were similar to policies that were undertaken by the Clinton

Administration in 1999, but were subsequently curtailed by the Bush Administration in 2003 and

2004. An exception is the expansion of airports to service licensed flights to and from Cuba.

While the new travel regulations immediately went into effect for those categories of travel

falling under a general license category, OFAC delayed processing applications for new travel

categories requiring a specific license (such as people-to-people exchanges) until it updated and

issued guidelines in April 2011.

The first people-to-people trips began in August 2011. In May 2012, the Treasury Department

tightened its restrictions on people-to-people travel by making changes to its license guidelines.

The revised guidelines require an organization applying for a people-to-people license to describe

how the travel “would enhance contact with the Cuban people, and/or support civil society in

Cuba, and/or promote the Cuban people’s independence from Cuban authorities.” The revised

guidelines also require specification on how meetings with prohibited officials of the Cuban

government would advance purposeful travel by enhancing contact with the Cuban people,

supporting civil society, or promoting independence from Cuban authorities.107 In September

2012, various press reports cited a slowdown in the Treasury Department’s approval or reapproval

of licenses for people-to-people travel since the agency had issued new guidelines in May.

Companies conducting such programs complained that the delay in the licenses was forcing them

to cancel trips and even to lay off staff.108 By early October 2012, however, companies

conducting the people-to-people travel maintained that they were once again receiving license

approvals.

In early April 2013, some Members of Congress strongly criticized singers Beyoncé KnowlesCarter and her husband Shawn Carter, better known as Jay-Z, for traveling to Cuba. Members

were concerned that the trip, as described in the press, was primarily for tourism, which would be

contrary to U.S. law and regulations. Some Members also criticized the singers for not meeting

with those who have been oppressed by the Cuban government. The Treasury Department stated

that the two singers were participating in an authorized people-to-people exchange trip organized

by a group licensed by OFAC to conduct such trips (pursuant to 31 C.F.R. 515.565(b)(2) of the

Cuban Assets Control Regulations), and OFAC determined there was no apparent violations of

U.S. sanctions. An August 2014 report by the Treasury Department’s Office of Inspector General

concurred with OFAC’s determination that the trip did not violate U.S. sanctions.109

107

U.S. Department of the Treasury, OFAC, “Comprehensive Guidelines for License Applications to Engage in TravelRelated Transactions Involving Cuba,” Revised May 10, 2012.

108

Damien Cave, “Licensing Rules Slow Tours to Cuba,” New York Times, September 16, 2012; Paul Haven, “U.S.

Travel Outfits Say Rules for Legal Travel to Cuba Getting Tighter,” Associated Press, September 13, 2012.

109

U.S. Department of the Treasury, Office of Inspector General, Memorandum Report, Terrorist Financing/Money

Laundering: Review of Travel to Cuba by Shawn Carter and Beyoncé Knowles-Carter, August 20, 2014.

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On April 30, 2013, 59 House Democrats sent a letter to President Obama lauding the President for

his 2009 action lifting restrictions on family travel and remittances, and for his 2011 action easing

restrictions on some categories of travel, including people-to-people travel. The Members also

called for the President to further use his “executive authority to allow all current categories of

permissible travel, including people-to-people travel,” to be carried out under a general license

(instead of having to apply to Treasury Department for a specific license). Such an action,

according to the Members, would increase opportunities for engagement and help Cubans create

more jobs and opportunities to expand their independence from the Cuban government.

As noted above, just after the adjournment of the 113th Congress, President Obama announced

major changes in U.S. policy toward Cuba on December 17, 2014. These changes included the

provision for general licenses for the 12 existing categories of travel to Cuba and an increase in

the amount of remittances to Cuba by any U.S. person to non-family members in Cuba to $2,000

per quarter (up from $500 per quarter). U.S. credit and debit cards will also be permitted for use

by authorized travelers to Cuba. Regulations implementing these changes reportedly will be

issued in several weeks.

Major arguments made for lifting the Cuba travel ban altogether are that it abridges the rights of

ordinary Americans to travel; it hinders efforts to influence conditions in Cuba and may be aiding

Castro by helping restrict the flow of information; and Americans can travel to other countries

with communist or authoritarian governments. Major arguments in opposition to lifting the Cuba

travel ban are that more American travel would support Castro’s rule by providing his

government with potentially millions of dollars in hard currency; that there are legal provisions

allowing travel to Cuba for humanitarian purposes that are used by thousands of Americans each

year; and that the President should be free to restrict travel for foreign policy reasons.

Legislative Activity. In the first session of the 113th Congress, both the House and Senate

versions of the FY2014 Financial Services and General Government appropriations measure,

H.R. 2786 and S. 1371, had different provisions that would have tightened and eased travel

restrictions respectively, but none of these provisions were included in the FY2014 omnibus

appropriations measure, H.R. 3547 (P.L. 113-76), signed into law January 17, 2014. The House

version of the FY2014 Financial Services and General Government appropriations measure, H.R.

2786 (H.Rept. 113-172), would have prohibited FY2014 funding used “to approve, license,

facilitate, authorize, or otherwise allow” people-to-people travel to Cuba, which the Obama

Administration authorized in 2011. In contrast, the Senate version of the measure, S. 1371

(S.Rept. 113-80), would have expanded the current general license for professional research and

meetings in Cuba to allow U.S. groups to sponsor and organize conferences in Cuba, but only if

specifically related to disaster prevention, emergency preparedness, and natural resource

protection. (For additional information see CRS Report R43352, Financial Services and General

Government (FSGG): FY2014 Appropriations.)

In the second session of the 113th Congress, the House version of the FY2015 Financial Services

and General Government Appropriations Act (H.R. 5016, H.Rept. 113-508), approved July 16,

2014, includes two provisions related to U.S. restrictions on travel to Cuba. Section 126 of the bill

would prevent any funds in the act from being used to approve, license, facilitate, authorize or

otherwise allow people-to-people travel. Section 127 would require a joint report from the

Secretary of the Treasury and the Secretary of Homeland Security with information for each fiscal

year since FY2007 on the number of travelers visiting close relatives in Cuba; the average

duration of these trips; the average amount of U.S. dollars spent per family traveler (including

amount of remittances carried to Cuba); the number of return trips per year; and the total sum of

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U.S. dollars spent collectively by family travelers for each fiscal year. Ultimately Congress did

not complete action on H.R. 5016, and the FY2015 omnibus appropriations measure approved in

December 2014 (P.L. 113-235) did not include the provisions on Cuba in H.R. 5016.

Several legislative initiatives were introduced in the 113th Congress that would have lifted all

travel restrictions: H.R. 871 (Rangel) would lift travel restrictions; H.R. 873 (Rangel) would lift

restrictions on U.S. agricultural exports as well as travel restrictions; and H.R. 214 (Serrano),

H.R. 872 (Rangel), and H.R. 1917 (Rush) would lift the overall embargo on Cuba, including

travel restrictions.

U.S. Agricultural Exports and Sanctions

U.S. commercial agricultural exports to Cuba have been allowed for more than a decade, but with

numerous restrictions and licensing requirements. The 106th Congress passed the Trade Sanctions

Reform and Export Enhancement Act of 2000 or TSRA (P.L. 106-387, Title IX) that allows for

one-year export licenses for selling agricultural commodities to Cuba, although no U.S.

government assistance, foreign assistance, export assistance, credits, or credit guarantees are

available to finance such exports. TSRA also denies exporters access to U.S. private commercial

financing or credit; all transactions must be conducted in cash in advance or with financing from

third countries.

Cuba has purchased about $5 billion in products from the United States since 2001, largely

agricultural products. U.S. exports to Cuba rose from about $7 million in 2001 to $404 million in

2004 and to a high of $712 million in 2008, far higher than in previous years, in part because of

the rise in food prices and because of Cuba’s increased food needs in the aftermath of several

hurricanes and tropical storms that severely damaged the country’s agricultural sector. From 2002

through 2010, the United States was the largest supplier of food and agricultural products to

Cuba. In 2011, Brazil became Cuba’s largest agricultural supplier, but this shifted back again to

the United States in 2012.110

U.S. exports to Cuba declined considerably from 2009 through 2011, amounting to $363 million

in 2010 and 2011 (see Figure 5), while in 2012, they rose to $464 million, a 28% increase.111 Part

of the increase in 2012 can be attributed to an increase in Cuba’s import needs because of damage

to the agricultural sector in eastern Cuba caused by Hurricane Sandy in October. In 2013, U.S.

exports to Cuba fell to $359 million, a decline of about 23% from the previous year. In the first

nine months of 2014, U.S. exports to amounted to $243 million, about 18% less than the same

period in 2013. Looking at the composition of U.S. exports to Cuba in recent years, the leading

products have been poultry, soybean oilcake, corn, and soybeans.

Among the reasons for the overall decline in U.S. exports to Cuba in recent years, analysts cite

Cuba’s shortage of hard currency; credits and other arrangements offered by other governments to

purchase their countries’ products; and Cuba’s perception that its efforts to motivate U.S.

110

Global Trade Atlas, derived by looking at reporting partners’ exports to Cuba.

The U.S. trade statistics cited in this report are from the Department of Commerce, as presented by Global Trade

Atlas.

111

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companies, organizations, local and state officials, and Members of Congress to push for change

in U.S. sanctions policy toward Cuba have been ineffective.112

Figure 5. U.S. Exports to Cuba, 2001-2013

(U.S. $ millions)

800

700

600

500

400

300

200

100

U.S. $ mil.

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

146 259 404 369 340 447 712 533 363 363 464 359

Source: Created by CRS using information from the Global Trade Atlas, which uses data from the U.S.

Department of Commerce.

The U.S. International Trade Commission (USITC) produced a study in 2007 analyzing the

effects of both U.S. government financing restrictions for agricultural exports to Cuba and U.S.

travel restrictions on the level of U.S. agricultural sales to Cuba.113 At the time of the study, the

U.S. share of various Cuban agricultural imports was estimated to range from 0% to 99%

depending on the commodity. If U.S. financing restrictions were lifted, the study estimated that

the U.S. share of Cuban agricultural, fish, and forest products imports would rise to between onehalf and two-thirds. According to the study, if travel restrictions for all U.S. citizens were lifted,

the influx of U.S. tourists would be significant in the short term and would boost demand for

imported agricultural products, particularly high-end products for the tourist sector. If both

financing and travel restrictions were lifted, the study found that the largest gains in U.S. exports

to Cuba would be for fresh fruits and vegetables, milk powder, processed foods, wheat, and dry

beans.

In 2009, the USITC issued a working paper that updated the agency’s 2007 study on U.S.

agricultural sales to Cuba. The update concluded that if U.S. restrictions on financing and travel

were lifted in 2008, U.S. agricultural exports to Cuba would have increased between $216 million

and $478 million and the U.S. share of Cuba’s agricultural imports would have increased from

112

Juan Tamayo, “Big Drop in U.S. Agricultural Sales to Cuba,” Miami Herald, July 29, 2010; Marc Frank, “U.S.

Food Sales to Cuba Continued Decline in 2011,” Reuters News, February 22, 2012; U.S.-Cuba Trade and Economic

Council, Inc. “Economic Eye on Cuba,” April 2014.

113

USITC, U.S. Agricultural Sales to Cuba: Certain Economic Effects of U.S. Restrictions, USITC Publication 3932,

July 2007, available at http://www.usitc.gov/publications/332/pub3932.pdf.

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38% to between 49% and 64%.114 Among the U.S. agricultural products that would have

benefited the most were wheat, rice, beef, pork, processed foods, and fish products.

In general, some groups favor further easing restrictions on agricultural exports to Cuba. U.S.

agribusiness companies that support the removal of restrictions on agricultural exports to Cuba

believe that U.S. farmers are unable to capitalize on a market so close to the United States. Those

who support the lifting of financing restrictions contend such an action would help smaller U.S.

companies increase their exports to Cuba more rapidly. Opponents of further easing restrictions

on agricultural exports to Cuba maintain that U.S. policy does not deny such sales to Cuba, as

evidenced by the large amount of sales since 2001.

As noted above, just after the adjournment of the 113th Congress, President Obama announced

major changes in U.S. policy toward Cuba on December 17, 2014. These changes included the

measures to expand commercial sales/exports to boost Cuba’s nascent private sector, including

agricultural equipment for small farmers, certain building materials for private residential

construction, and goods for use by private sector Cuban entrepreneurs. U.S. institutions will be

permitted to open correspondent accounts at Cuban financial institutions to facilitate the

processing of authorized transactions, and the definition of the term “cash in advance” will be

revised to specify that it means “cash before transfer of title.” Regulations implementing these

changes reportedly will be issued in several weeks.

Legislative Activity. Over the past several years, there have been legislative efforts to further

ease restrictions on agricultural exports to Cuba. For FY2010 and FY2011, Congress included a

provision in omnibus appropriations measures (Division C, Section 619 of P.L. 111-117, and

continued by reference in Division B, Section 1101 of P.L. 112-10) that temporarily overturned

OFAC’s 2005 clarification that TSRA’s requirement for “payment of cash in advance” meant that

the payment for the agricultural goods had to be received prior to the shipment of the goods from

the port at which they were loaded in the United States. U.S. agricultural exporters and some

Members of Congress had objected that OFAC’s 2005 action constituted a new sanction that

violated the intent of TSRA, and jeopardized millions in agricultural sales. The legislative

provisions cited above redefined payment of cash in advance for FY2010 and FY2011 to mean

that payment was to be received before the transfer of title to, and control of, the exported items

to the Cuban purchaser. This essentially meant that payment could occur before a shipment was

offloaded in Cuba, rather than before an export shipment left a U.S. port.

For FY2012, Congress did not include a similar provision in the Consolidated Appropriations

Act, 2012 (P.L. 112-74). While the Senate Appropriations Committee-approved version of the

FY2012 Financial Services appropriations measure (S. 1573) had a provision that would have

continued the definition of “payment of cash in advance” utilized in FY2010 and FY2011, this

was not included in the final omnibus legislation. The Senate bill also contained another Cuba

provision that would have prohibited restrictions on direct transfers from a Cuban financial

institution to a U.S. financial institution in payment for licensed exports to Cuba. This provision

as well was not included in the omnibus appropriations legislation.

114

USITC, U.S. Agricultural Sales to Cuba: Certain Economic Effects of U.S. Restrictions, An Update, Office of

Industries Working Paper, by Jonathan R. Coleman, No. ID-22, June 2009, available at

http://www.usitc.gov/publications/332/ID-22.pdf.

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In the 113th Congress, one bill was introduced that included measures to facilitate the export of

U.S. agricultural products to Cuba, H.R. 873 (Rangel), while three other bills that would have

lifted the overall embargo—H.R. 214 (Serrano), H.R. 872 (Rangel), and H.R. 1917 (Rush)—

would have lifted restrictions and licensing requirements on U.S. agricultural exports to Cuba. In

other action, a July 2014 draft report by the Senate Appropriations Committee, Subcommittee on

Financial Services and General Government to the Senate version of the FY2015 Financial

Services appropriations measure (not introduced)115 would have directed the Treasury Department

to coordinate with the Departments of Commerce and Agriculture to conduct a review of the

extent to which the prohibition on U.S. private financing or credit for sales of U.S. agricultural

commodities negatively affects small U.S. exporters and farmers.

Trademark Sanction116

For some 15 years, the United States has imposed a trademark sanction specifically related to

Cuba. A provision in the FY1999 omnibus appropriations measure (§211 of Division A, Title II,

P.L. 105-277, signed into law October 21, 1998) prevents the United States from accepting

payment for trademark registrations and renewals from Cuban nationals that were used in

connection with a business or assets in Cuba that were confiscated, unless the original owner of

the trademark has consented. The provision prohibits U.S. courts from recognizing such

trademarks without the consent of the original owner. The measure was enacted because of a

dispute between the French spirits company, Pernod Ricard, and the Bermuda-based Bacardi Ltd.

Pernod Ricard entered into a joint venture in 1993 with the Cuban government to produce and

export Havana Club rum. Bacardi maintains that it holds the right to the Havana Club name

because in 1995 it entered into an agreement for the Havana Club trademark with the Arechabala

family, who had originally produced the rum until its assets and property were confiscated by the

Cuban government in 1960. Although Pernod Ricard cannot market Havana Club in the United

States because of the trade embargo, it wants to protect its future distribution rights should the

embargo be lifted.

The European Union initiated World Trade Organization (WTO) dispute settlement proceedings

in June 2000, maintaining that the U.S. law violates the Agreement on Trade-Related Aspects of

Intellectual Property (TRIPS). In January 2002, the WTO ultimately found that the trademark

sanction violated WTO provisions on national treatment and most-favored-nation obligations in

the TRIPS Agreement.117 On March 28, 2002, the United States agreed that it would come into

compliance with the WTO ruling through legislative action by January 3, 2003.118 That deadline

was extended several times since no legislative action had been taken to bring Section 211 into

compliance with the WTO ruling. On July 1, 2005, however, in an EU-U.S. bilateral agreement,

the EU agreed that it would not request authorization to retaliate at that time, but reserved the

right to do so at a future date, and the United States agreed not to block a future EU request.119 In

115

U.S. Senate, Committee on Appropriations, “FY15 FSGG Subcommittee Reported Bill and Draft Report,” July 24,

2014, available at http://www.appropriations.senate.gov/news/fy15-fsgg-subcommittee-reported-bill-and-draft-report.

116

For background information, see archived CRS Report RS21764, Restricting Trademark Rights of Cubans: WTO

Decision and Congressional Response, by (name redacted), March 9, 2004.

117

For background, see archived CRS Report RL32014, WTO Dispute Settlement: Status of U.S. Compliance in

Pending Cases, by (name redacted), April 23, 2012.

118

“U.S., EU Agree on Deadline for Complying with Section 211 WTO Finding,” Inside U.S. Trade, April 12, 2002.

119

World Trade Organization (WTO), “United States—Section 211 Omnibus Appropriations Act of 1998,

Understanding between the European Communities and the United States,” WT/DC176/16, July 1, 2005; WTO,

(continued...)

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June 2013, EU officials reportedly raised the issue of U.S. compliance at a WTO Dispute

Settlement Body meeting, maintaining that there has been enough time for the United States to

settle the issue, while U.S. officials maintained that relevant bills were before the U.S.

Congress.120

On August 3, 2006, the U.S. Patent and Trademark Office announced that Cuba’s Havana Club

trademark registration was “cancelled/expired,” a week after OFAC had denied a Cuban

government company the license that it needed to renew the registration of the trademark.121 On

March 29, 2011, the U.S. Court of Appeals of the District of Columbia upheld the decision to

deny the renewal of the trademark,122 while in May 2012, the U.S. Supreme Court declined to

hear the case, effectively letting stand the denial to renew the trademark.123

Bacardi began marketing Havana Club rum in the United States in 2006 in limited quantities in

Florida, and Pernod Ricard filed suit that the representation of the origin of the rum was

misleading. In April 2010, a U.S. District Court in Delaware ruled in Bacardi’s favor that the

labeling was not misleading, and this was reaffirmed by a U.S. Court of Appeals on August 4,

2011.124

Legislative Activity. In Congress, two different approaches have been advocated for a number of

years to bring Section 211 into compliance with the WTO ruling. Some want a narrow fix in

which Section 211 would be amended so that it applies to all persons claiming rights in

trademarks confiscated by Cuba, whatever their nationality, instead of being limited to designated

nationals, meaning Cuban nationals. Advocates of this approach argue that it would treat all

holders of U.S. trademarks equally. Others want Section 211 repealed altogether. They argue that

the law endangers over 5,000 trademarks of over 500 U.S. companies registered in Cuba.125 The

House Committee on the Judiciary held a March 3, 2010, hearing on the “Domestic and

International Trademark Implications of HAVANA CLUB and Section 211 of the Omnibus

Appropriations Act of 2009,” which featured proponents of both legislative approaches. (See

http://judiciary.house.gov/hearings/hear_100303.html.)

Several legislative initiatives were introduced during the 112th Congress reflecting these two

approaches to bring Section 211 into compliance with the WTO ruling, but no action was taken

on these measures. In the 113th Congress, identical bills H.R. 778 (Issa) and S. 647 (Nelson)

would have applied the narrow fix so that the trademark sanction would apply to all nationals,

while four broader bills lifting U.S. sanctions on Cuba—H.R. 214 (Serrano); H.R.

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